Ofgem acts to give customers 'more muscle'

Published:
20 October 2009
Topic:
News,Gas & Electricity

Following its probe into the energy markets, watchdog Ofgem has outlined a timetable for the new measures designed to make the system fairer for customers.

The UK's energy watchdog has set out a timetable for change as it brings changes into force that should mean customers are treated more fairly.

It's determined to give "more muscle" to consumers, following its recent investigation into the energy market, which it said revealed flaws in the system.

Over the course of 2010, several new rules will come into play, designed to make the market fairer for consumers and, most importantly, to make it easier for them to switch.

These include all energy customers receiving their first annual statement by December next year and allowing pre-payment customers to switch even if they have outstanding debts of as much as £200 - compared to £100 just now.

If you aren't quite sure how to go about changing suppliers, watch our video 'How to switch your energy provider'

 

Ofgem spokesman Andrew Wright said: "Ofgem has taken on the main consumer concerns and placed tougher rules on the suppliers to remedy those concerns.

"As each measure comes into play, consumers - including low-income households and small businesses - will be armed with better information and protection. That will give them more muscle in the market to put a greater competitive squeeze on the suppliers."

What are these changes?

The package of measures unveiled by the watchdog include:

  • Tougher rules on marketing - including doorstep selling
  • Ensuring suppliers provide clearer information on bills to help customers compare tariffs
  • Greater protection for small businesses
  • More assistance for low-income and vulnerable households to switch to better deals
  • An obligation for suppliers to publish their revenue, costs and profits.

Ofgem has also rolled out a set of overarching standards it expects suppliers to keep to when dealing with domestic customers and small business.

High standards

The watchdog reported that the behaviour of energy firms plays a key role in allowing customers to make effective decisions about switching.

In a letter to the UK's energy suppliers, Wright explained: "I urge suppliers to consider carefully the extent to which the products they offer may be unnecessarily complex or confusing and therefore hinder, rather than help, consumers from making well-informed choices."

The standards set out by Ofgem are:

  • That customers must not be sold inappropriate products and services, or anything they do not fully understand
  • Energy firms must not change the product or service a customer receives without explaining why
  • Suppliers must not prevent customers from switching without good reason
  • Products should not be unnecessarily complex or confusing
  • It should be easy for customers to contact energy firms, and suppliers must act promptly and courteously where they have made mistakes.

Power to the people?

Scott Byrom, moneysupermarket.com's energy expert, said this will help customers switch to better deals.

"It is empowering news for the 5.4million pre-payment customers in the UK that by January they will be able to swap suppliers even if they have a debt on bills of up to £200.

"Even better, tougher rules on doorstep sellers are being introduced; by providing written quotes on a doorstep UK bill payers will be able to do their own subsequent research to ensure they are getting the best deal for their circumstances."

However, he warned that energy suppliers still have a way to go to ensure that customers paying quarterly and by cash or cheque are not being charged unfairly compared to those settling their bills by monthly direct debit.

"Last month Ofgem pledged to ensure different payments reflect the actual cost to the supplier - there is no doubt customers will want to see the proof of this, and energy suppliers will have to deliver."

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