Warning: Exit fees on fixed energy tariffs are up to 10 TIMES higher than last year
Energy suppliers have massively hiked the early exit fees on their cheapest fixed deals amid the current energy crisis. You could be charged up to a staggering £600 to leave a fixed deal early, so if you're thinking of fixing your energy right now, make sure you check the exit penalties before signing up as getting it wrong could be costly.
Just a year ago, typical exit fees on a fixed deal for a dual-fuel home was £60, and the highest level we saw was £150. Yet currently, many fixed deals have sky-high exit feels. That means if wholesale prices do start to fall and cheaper fixes become available, any benefit you might gain from switching could be wiped out, as you may have to stump up as much as £600 in exit fees.
For the latest updates on the top deals on the market and the fixes worth considering, see Martin's 'Should you fix your energy deal? analysis.
You could be charged up to £600 in exit fees for leaving a fixed deal early
The figures below list the exit fees being charged right now on all the tariffs we know about, compared to what they were charging a year ago. A few firms charge different fees depending on the length of the fix, with one-year fixes tending to have lower exit fees. And some firms, such as Octopus Energy and E.on, still don't charge fees at all, while others such as Bulb or Shell Energy don't currently offer any fixed deals – we've not included these.
|Supplier||Dual-fuel exit penalties June 2022
||Dual-fuel exit penalties June 2021|
||One-year fixed deals: £200||Two-year fixed deals: £0 and £80|
||Two-year fixed deals: £300||One-year fixed deals: £0
Two-year fixed deal: £70
|Outfox the Market:
||One-year fixed deal: £600||One-year fixed deals: £0 and £67|
||One-year fixed deals: £60
Two-year fixed deal: £120
|One-year fixed deals: £60
Two-year fixed deal: £60
||One-year fixed deals: £300
Two-year fixed deals: £300
|One-year fixed deals: £60
Two-year fixed deal: £0
|So Energy||One-year fixed deal: £60
Two-year fixed deal: £120
|One-year fixed deal: £10|
|SSE||Two-year fixed deal: £60||One-year fixed deal: £0
Two-year fixed deals: £0 and £150
|Exit fees are for a dual-fuel household.|
Martin: "These massive, outrageous early exit fees, are the final nail in the coffin of dying energy competition"
Martin Lewis, founder of MoneySavingExpert.com, said: "These massive, outrageous early exit fees, are the final nail in the coffin of dying energy competition. Many people are trying to decide whether to fix or not at the moment. That no longer means going cheaper, it’s about whether you should pay more now, to forestall the huge rise likely coming in October.
"Yet, the difficulty of making that decision is compounded by the fact that you can no longer use a comparison site. The only deals out there worth considering are existing customer deals, and the rules say providers don’t have to publish them – they can offer them to individuals. This means there’s far less help available for people making those decisions (at MSE we try and compile the tariffs, but we rely on consumers reporting them to us).
"The lack of transparency and visibility makes it easier for firms to add on these hideous early exit penalties if you leave before the fix ends. Altogether, that just ramps up the consequence of the decision of whether to fix or not, because with these tariffs you can no longer escape easily if you later think you’ve made the wrong call. It’s a pig’s ear and the regulator needs to intervene to change things."
What can I do about high exit fees?
If you do switch to a fix with high exit fees and change your mind, you always have a 14-day cooling off period after you switch, when you can cancel without penalties. You also can't be charged exit fees if you switch away within the last 49 days of your fixed-term contract.
Also, certain suppliers, such as British Gas, let you switch to another of its tariffs without paying exit fees, so you could move from a fixed deal to its standard tariff (or another of its fixed deals) penalty-free – though do check with your supplier first.
Otherwise, it's a case of buyer beware. If you want to lock in your energy deal right now, you will need to pay the exit fees if you do want to leave the tariff early. That means if you lock in, and energy prices do start to fall, the fees could wipe out any potential savings from switching.
Bear in mind you can only be charged exit fees on fixed-term deals – which essentially means it has an end date. If you are on a contract without an end date, such as standard variable tariffs, you CAN'T be charged exit penalties and are free to switch away at any point.
What are the rules around high exit fees and what does Ofgem say?
Under the energy licence conditions suppliers must adhere to, the fees must be 'proportionate' and 'must not exceed direct economic loss' to the losing supplier.
However, regulator Ofgem doesn't define what's proportionate or how much would exceed direct economic loss.
When we asked Ofgem if the current exit fees levels are too high, it told us that the "economic loss to suppliers is much higher in the current market than historically" and that suppliers are "not prohibited from charging exit fees". It said suppliers must make any exit fees clear in the 'Principal Terms' of the tariff, which need to be provided before you enter into a contract.
An Ofgem spokesperson said: "Our top priority is to protect consumers which is why just this week we’ve announced robust new measures to stop customer money being used like an interest free credit card by energy suppliers. In terms of exit fees, we fully expect suppliers to make sure charges are fair and equitable and rules are clear that termination fees are allowed but should be proportionate."
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