Almost 1,400 Ovo customers are to receive compensation after the energy firm was hit with a £2.37 million penalty by the industry watchdog for complaint handling failures.

Ofgem said that 1,395 Ovo customers were affected by lengthy delays in seeing their complaints addressed – in some cases up to 18 months.

It said there were also delays in Ovo actioning the Energy Ombudsman’s decision when complaints were progressed.

Ovo will pay £378,512 in compensation to affected customers and has also paid an extra £2 million to the Energy Industry Voluntary Redress Scheme “in recognition of the severity of consumer detriment caused”, according to Ofgem.

Customers will be contacted directly by Ovo, the regulator confirmed.

Jacqui Gehrmann, deputy director of retail compliance at Ofgem, said: “Ovo failed to adequately protect and respond to their customers when it was needed most. This is not acceptable.

“Consumers deserve a clear and timely response when they make a complaint, and that’s why we stepped in quickly when we identified that Ovo’s performance was falling below acceptable standards.”

Ofgem first contacted Ovo in June last year after reported concerns over the time taken to address complaints referred by Citizens Advice Scotland’s Extra Help Unit, as well as to action decisions from the Energy Ombudsman.

Ovo has since boosted its complaint handling operation, improving its complaints management system and making sure senior staff have oversight of complaints.

The Energy Ombudsman said: “Our role is to resolve disputes between consumers and energy suppliers, providing independent and impartial decisions that ensure fair outcomes.

“These decisions are legally binding and suppliers are required to implement them within 28 days.

“While the majority of resolutions are carried out on time, there are instances where consumers face unacceptable delays.

“It is reassuring to see that this investigation is now concluded, and that Ovo has reviewed and improved its systems and procedures.”

An Ovo spokeswoman said: “We recognise that a particular group of our customers in 2023 waited longer than we’d like for a resolution and were overdue a response from us, so we’ve sent them a letter of apology and compensation to help.”