Shell Shock: Shell Energy and the dangers of manual processes

Shell Energy is the latest firm to fall foul of the UK’s Ofcom regulations for not informing out-of-contract customers of better tariffs. Why have they come under fire, and what can other telcos learn from their mistakes?

Ofcom has fined the broadband wing of Shell Energy to the tune of £1.4 million for – yep, you guessed it – not informing phone and broadband customers of the end of their contracts or of new, cheaper deals.

According to rules introduced in February 2020 to tackle the “loyalty penalty”, telecoms firms are obliged to notify customers when their contract period is coming to an end, and whether they could be on a better tariff with the same provider. By Ofcom’s own findings, out-of-contract customers could save an average of £100 a year by renegotiating with their provider.

Under the rules, telcos must inform customers, by text, email or letter, of:

• the contract end date
• how much they will pay when the contract period ends
• the provider’s best tariffs, including those available only to new customers
• any notice period for ending their contract

In this case, between March 2020 and June 2022, Shell Energy sent 72,837 customers (nearly 15% of their total customer base) inaccurate or incomplete end-of-contract notifications (ECNs) and annual best tariff notifications (ABTNs), or in some cases, simply didn’t send these notifications at all. Of those, it was found that 6,054 customers went on to pay higher charges – an extra £66 each – due to incorrect information contained within their end-of-contract notification.

This was reportedly caused by “a combination of manual errors and systems and process failures” to which Shell Energy has since made unspecified changes to fix. This begs the question as to why this operation depended on manual processes for so long? Given that Ofcom’s rules were introduced only a month before the investigation period, who knows how long this was actually going on for.

Manual interventions increase the probability of human error, directly impacting consumer trust in their provider, leading to dissatisfaction and, in many cases, churn. Inefficient back-end processes incur higher operational costs due to error rectifications, the cumulative impact resulting in a decline in market share and consumer
confidence.

As the breach of rules was self-reported in April 2022, Ofcom discounted the fine by 30%, reflecting the time and effort saved on investigating. A full version of their confirmation decision is, as of writing, being prepared for publication, perhaps shedding further light on the problems inside Shell Energy that led to the investigation.

Shell Energy was born in 2018 from the husk of First Utility, which the oil giant acquired along with its small broadband division. After taking on a larger clutch of broadband customers from the Post Office in 2021, Shell Energy became the sixth largest ISP in the UK by subscriber count. However, seeing not much money in home energy or the broadband market now, Shell is selling up to Octopus Energy for an undisclosed sum.

The move into the broadband market had made sense at the time, opening up a new revenue stream for Shell and creating a captive market for the firm to sell its home energy tariffs to. However, as customers face further financial pain from energy bills rising once again, the last thing they will want is to be overpaying on broadband from that very same provider!

Efficient back-end automation isn't just a convenience; it’s an essential component of any telecoms company. Customers seek reliability, consistency and innovation from their service providers. Failure to meet these expectations due to process inefficiencies and system failures not only tarnishes a company’s reputation but also impedes its capacity to attract and retain customers.

Get in touch with Cerillion now to learn how our pre-integrated BSS/OSS Suite can automate your business operations.

UPDATE [14/12/2023]: It has been reported that TalkTalk is to acquire Shell Energy's broadband customers in a deal with Octopus Energy.