Regulator Ofgem is pushing ahead with plans to encourage customers to find the best energy deals, with a series of trials taking place that will include forcing suppliers to reveal cheaper tariffs offered by rivals.
Several suppliers are already trialling methods of making disengaged energy customers savvier about switching, but yesterday's announcement from Ofgem could see others forced to take part in schemes such as renaming expensive standard variable tariffs to less appealing-sounding 'out-of-contract' tariffs.
Two-thirds of customers on standard variable tariffs are paying far more than they need to, according to data from the Competition and Markets Authority (CMA) – something Ofgem says it's determined to combat.
It comes as the energy watchdog revealed it was also adding an overarching "vulnerability principle" to the licence terms of ALL suppliers, so they're obliged to proactively identify and help disabled, elderly, ill or vulnerable customers.
The move is aimed at protecting customers who fall between the gaps of the hundreds of current rules on protecting vulnerable customers – such as those who suffer temporary illnesses or disabilities.
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How will switching be encouraged?
The regulator will make selected suppliers participate in trials of four ideas aimed at encouraging disengaged customers to switch to a cheaper tariff. The schemes include:
- Suppliers being forced to tell customers about the cheapest deals on the market: This is separate from the CMA's switching database. In Ofgem's scheme it's actually your existing supplier that'll be forced to tell you about better deals elsewhere. It's not clear how this contact will be made (whether by post, email, phone or text).
- The name of standard tariffs could change: For example, they may instead be referred to as 'out-of-contract' tariffs in a bid to make them sound less appealing.
- Experimenting with different ways of presenting customers' bills: There's little detail on this yet but the level and type of information included in bills might change.
- Changes to information customers receive once their fixed deals end: Again, there's little detail on how this will work but the emphasis will be on encouraging customers to switch to the best deals.
Though enforced by Ofgem, these trials were originally proposed by the CMA in June 2016 after it investigated the energy market.
What does Ofgem say?
Rachel Fletcher, Ofgem's senior partner for consumers and competition, says: "We must end the two-tier market where only a third of people get the best deals, while the remainder do not benefit from competition.
"By overseeing these trials, we will make sure that suppliers are doing everything they can to test ways to help these customers find better deals. This could be through switching supplier or helping loyal customers find cheaper tariffs with the current supplier.
"As the market develops, we want to ensure that customers in vulnerable situations are not left behind. So we are making clear that suppliers have a special responsibility to these customers. We are proposing an enforceable principle for suppliers to make all efforts to identify and support them."