Automatic compensation: What you’re entitled to and when you should get it

Thames Water has come under fire from the chancellor Jeremy Hunt for dragging its feet on compensating his constituents, who were left without water last year. There are a number of industries that must automatically compensate you under certain circumstances. Here I explain how it works.

Many of us are aware that we are entitled to some sort of compensation from businesses should they fail to provide us with a decent service. But it is not always clear whether you need to apply for it or not and how much you are entitled to.

So I’ve plunged into the regulations and investigated the companies and the quirks to bring a guide to compensation when things go wrong with utilities businesses.

In this article, I cover:

• What are the different types of compensation for service failures?
• Water: when are you be entitled to automatic compensation?
• Energy: when are you automatically compensated?
• Energy: when do you have to apply for compensation?
• Broadband and landline: can you get automatic compensation?

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What are the different types of compensation for service failures?

The situation with compensation is unfortunately – though perhaps unsurprisingly – not straightforward. There are rules, caveats and complications galore, which might help to explain why some businesses do not seem to be following the requirements as closely as we would hope.

Compensation can either be automatic or by application. If it is the former then you will usually have the money applied to your utility bill in the form of a credit or a deduction from what you owe, or a cheque for the sum. You shouldn’t have to lift a finger.

If compensation is by application, then you will have to do the work yourself by contacting the company.

Confusingly, different types of service failure within an industry can lead to either automatic or application compensation.

What is the difference between compensation and refund?

It’s also worth highlighting the distinction between compensation and refunds, as the two are often thought about interchangeably.

Compensation is a payment from a company or organisation for failing to provide an acceptable level service. Refunds are when you are getting money back that you have already paid.

The “delay/repay” system for trains, for example, actually falls in to the latter category even though it is often called compensation. All you are getting back from the train company is the money that you already paid for your ticket.

So let me go through each industry’s compensation schemes.

Water: when are you be entitled to automatic compensation?

If your water supply is interrupted and you live in England and Wales, then you are entitled to automatic compensation.

Under the Guaranteed Standards Scheme (GSS), your water company must ensure that your water pressure is (more or less) consistent. Appointments to fix issues must also be kept and supply interruptions need to be dealt with promptly.

If you live in Scotland, Scottish Water has a consumer charter that lists the compensation payable under a range of different circumstances. There is no automatic compensation in Northern Ireland as domestic customers do not pay water rates.

Check out my guide on how to make a claim for storm and flood damage.

When you might be entitled to compensation

There are a host of different issues that can result in automatic compensation being owed to you. These include:

• Low water pressure: £25
• Failure to inform you of planned works that will cut off your water: £20
• Not restoring your water supply: £20 for the first 24 hours
  • £10 for each subsequent 24 hour period
• Appointments not made properly or not kept: £20
• Failure to sort out written queries and changes to how you pay: £20
• Written complaints not addressed on time – replies within 10 working days, payment changes within 5 working days: £20

You can check out a table covering the full list of compensation payments that you’re entitled to on Ofwat’s website. 

And it doesn’t stop there!

Different levels of compensation

If a problem with the sewers affects your property or business, then the compensation level increases.

For internal flooding of your property, you are entitled to a payment equal to your annual sewerage charges – ranging from £150 to £1000. The amount reduces to 50% of the annual sewerage charges from £75 to £500, if the flooding is only external.

You can find such charges listed on your water bill if you aren’t sure how much they are.

The money should be given to you by cheque, unless you owe money on your bill, in which case the payment will be deducted from your debt.

You are also entitled to compensation for interrupted services during droughts – though this is for essentials, obviously, and does not include filling up the hot tub, for example. The payment is currently £10 a day if you are a residential customer and more for businesses.

Read more: Should I consider home flood insurance?

Late payment charges

There are also late payment charges for the company if the compensation isn’t paid to you on time in certain circumstances (not water pressure issues). The timescales will vary depending on the situation, but are generally between 10 to 20 days.

If the business doesn’t pay up on time then you can make a formal complaint to your supplier. Failing that, for those who live in England and Wales, you can head to the free Consumer Council for Water (CCW), which will look at your complaint.

If the water company or the CCW can’t sort out your issue then it can be referred to the water regulator Ofwat.

Check out my ultimate guide to your shopping rights.

Energy: when are you automatically compensated?

Sadly, you don’t get automatic compensation for billing errors or faulty meters, you will need to apply for it. When making a complaint, tell the business what you want to sort it out – including that you are after compensation.

There are two main issues which you can get automatic compensation for when it comes to your energy supplier.

1. Appointments

You can get automatic compensations for missed and delayed appointments. Your supplier has certain obligations to you:

• An appointment must be offered within a “reasonable time”
• Faulty meter appointments should take place within 5 working days of notification
• Appointments for faulty prepayment meters, where you have lost supply, should take place within three hours of notification on a working day or within four hours on any other day
• If you have to wait longer, you should receive £30 under The Electricity and Gas (Standards of Performance) (Suppliers) Regulations 2015
• If your supplier fails to make these initial payments, you should receive an additional £30 payment under regulation 8.3 of The Electricity and Gas (Standards of Performance) (Suppliers) Regulations 2015

2. Switching

Auto-compensation also applies if are switched to another energy supplier without your permission or delays occur when you are being switched with your permission. This is more common that you might think, which is why regulator Ofgem introduced this payment in May 2020.

Since then the energy crisis has all but killed off switching. But I hear lots of complaints from people who say that they have been transferred to another energy provider with no explanation or logical reason.

Here’s when automatic compensation should be paid:

• Not completing a switch within 15 working days: £30
• Failure to refund a credit balance with 10 working days of the final bill: £30
• Switching you to another supplier by mistake: £30 from the new supplier
• Failure to acknowledge or rectify a mistaken switch within 20/21 days: £30 from the new supplier
• Not issuing a final bill (from the old provider) within six weeks: £30

How you get the money depends on your energy supplier. It could go directly into your bank account, you could receive a cheque or credit might be added to your bill or meter.

Should you be switching to a fixed energy deal now?

Energy: when do you have to apply for compensation?

You are entitled to compensation for power outages, but with two important things to note: you have to apply for it, and the money comes from your network provider, not your energy supplier. This is more complicated and there are time limits.

You can find your network supplier by heading to the Ofgem website and tapping in your postcode. You need to put your claim in within three months of the incident. If the power cut was planned but you were given no notice, then you have just one month to apply.

The compensation you are entitled to depends on whether the power cut occurred as a result of:

• Severe weather
• Normal weather

Severe weather

Storm category 1

• £80 if your power has been cut-off for 24 hours
• Extra £40 for every 6 hours afterwards up to a maximum of £2,000

Storm category 2

• £80 if your power has been cut-off for 48 hours
• Extra £40 for every 6 hours afterwards up to a maximum of £2,000

NOTE: If the power cut is because of disruption to the national energy supply, you will not be entitled to compensation. This is because it is not due to a fault on the network.

Read more: How to limit the cost of storm and flood damage

Normal weather

If the power outage occurs during normal weather and more than 5,000 homes are affected by the single fault, then the supplier has 24 hours to get the power back on.

You are entitled to £90 after 12 hours without power and a further £40 for each additional 12 hours, up to £300.

If you want to take your complaint about compensation and power outages further, you can complain to the free Energy Ombudsman about both your gas and electricity supplier and the network provider.

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Broadband and landline: can you get automatic compensation?

Telecommunications regulator, Ofcom, also has an automatic compensation scheme for when things go wrong with your broadband service.

The scheme is only voluntary but it’s considered good business practice for a provider to opt in and so all the main providers do. You can find a full list here.

Here’s what you can expect in terms of automatic compensation:

• Delayed repairs after losing service: £9.33 per day after two working days
• Engineer fails to turn up or an appointment is cancelled with less than 24 hours’ notice: £29.15 per appointment
• Delays starting the new service: £5.83 for each day after the missed start date

These payments should also increase annually in line with inflation each year.

Compensation should be paid no later than 30 days after the incident and will be paid as a credit, though you can ask for an alternative method.

Make sure you note down when the problem occurred. This could be through screenshots of service trackers like Down Detector, though calling and reporting the problem is best.

If your complaint doesn’t work, then why you can go to the ombudsman. There are two ombudsman Services for the telecoms industry. They are free and offer fair and impartial alternatives to the court, with the ombudsman’s decision ultimately being binding on the firm (but not you).

The largest of the services is the Communications Ombudsman. Alternatively you can go via CISAS, the Communication and Internet Services Adjudication Scheme.

Find out how you can save money on your broadband.