Opinion: £40 in compensation insults households hit by smart meter faults
While any compensation for dodgy smart meters is good news, Katy Ward believes current reimbursement offers simply don’t measure up.
As most of our readers will know, we have long been critics of the issues that have dogged smart meters since they became a fixture across the UK.
Following a botched rollout, these devices have been hit by faulty displays and a tendency to go “dumb”, meaning users often need to submit their own readings.
So, what’s changing?
From early 2026, energy suppliers could be forced to pay customers £40 if they fail to install a smart meter within six weeks or if a defective meter isn’t fixed within 90 days.
The plans are part of a wider crackdown that has already seen the regulator oversee the repair or replacement of more than 600,000 faulty meters since July last year.
Surely, this is good news?
Of course, any compensation is welcome.
In fact, Martin Lewis, founder of MoneySavingExpert.com, warns that “likely one in five” smart meters don’t work as they should.
This, he argues, undermines the entire roll-out: dissatisfied customers warn others to avoid smart meters, fuelling resistance to the scheme.
While I don’t disagree that any form of compensation is a step in the right direction, I would argue that the current sum on offer is insufficient, given the level of stress and inconvenience that smart meter issues have caused millions of households
Here’s why…
Just not enough
Automatic compensation is a welcome principle. It removes the need for customers to battle through phone queues and paperwork to claim what is rightfully theirs.
However, the size of the payout is another matter entirely and, in many cases, £40 is unlikely to reflect the real-world cost of these delays and faults.
Take the example of an office worker. A missed installation could mean burning a day of annual leave to wait for an engineer – who might not even show up.
For freelancers and small business owners, this delay could mean hundreds of pounds in lost earnings.
The human impact
And that’s before you factor in the hassle of dealing with inaccurate bills, inflated Direct Debits or being wrongly switched to prepayment mode.
While the statistics may make the issue sound technical (ie “one in five meters faulty”, “600,000 replaced”), we need to remember these are real people.
Imagine, for example, you’ve budgeted carefully for your monthly bills, only to receive an inflated demand for hundreds of pounds because your smart meter stopped transmitting readings six months ago.
Or worse, your meter is wrongly switched to prepayment mode without warning, leaving you without heating or electricity until the fault is corrected.
And for those affected, £40 doesn’t come close to covering the inconvenience, stress, and potential financial harm.
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Not a case of one-size-fits-all
For me, these examples hammer home that the flat-rate approach to compensation is fundamentally flawed.
The minor inconvenience of submitting a manual reading is not remotely comparable to being wrongly disconnected from your power supply for days.
However, under these proposals, both situations would result in the same £40 payment.
Without a tiered system that takes into account the severity of the impact on each victim, the scheme risks being little more than a toothless tiger or token gesture.
A missed opportunity
While Ofgem’s proposals are a step forward, they also look like the kind of minimal change designed to grab headlines without rocking the boat.
A £40 fine won’t trouble the profit margins of large energy companies.
For many suppliers, it’s a cost of doing business – far cheaper than investing in faster repairs or better customer service.
If the regulator genuinely wants to shift behaviour, the financial penalty needs to be big enough to hurt.
So, what’s the solution?
While years of confusion and mistrust are unlikely to be undone overnight, I would argue that there are steps the Government and the regulator could take if they want to start regaining public trust:
- Scale payments by severity: minor inconvenience? Small payout. Major disruption, such as wrongful disconnection? Much larger sum;
- Compensate for financial losses: losses such as forfeited earnings, spoiled food or the cost of temporary accommodation need to be covered under the compensation scheme;
- Penalise repeat failures: suppliers that repeatedly fail the same customer should face higher payouts each time;
- Guarantee automatic payouts: no chasing, no forms; the supplier knows the fault.
Rebuilding trust in smart meters
While the UK’s smart meter roll-out was meant to modernise the way we use and manage energy, it’s fair to say expectations have fallen short.
Worryingly, technical faults, missed installations, and poor aftercare have eroded public confidence.
Fixing that trust problem needs more than repairing devices – it requires showing that suppliers accept their failings and are open to solutions.
Final thought
The principle behind Ofgem’s proposals is sound: customers shouldn’t have to beg for fair treatment when suppliers let them down.
But unless compensation reflects the harm caused – and truly incentivises energy companies to improve – it will remain more of a political soundbite than a consumer safeguard.
It’s time for a compensation system that reflects the true cost of failure, deters repeat mistakes, and puts customers back at the centre of the story – where they should have been all along.
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