Saturday, 27 October 2012

Energy tariff cashback deals could be targeted as Ofgem cracks down

Ofgem is to look at how introductory offers like cashback are marketed on price comparison websites.

Sources at the regulator have told This Is Money they are unhappy with industry practices that involve creating headline-grabbing discounts of several hundred pounds to encourage consumers to switch supplier, but which energy companies offer for only a limited quota to sign up a small number of customers with the remainder given more expensive deals.

The regulator takes over the voluntary code of practice for price comparison companies in January. Currently 12 switching companies are accredited, which means they have agreed to independent audit, can display a Confidence Code logo on their website and adhere to a set of rules for how prices are displayed.

The regulator has already announced plans to remove complexity from tariffs. It wants customers to be able to say what their tariff price for gas and electricity is. Currently even Phil Bentley, managing director of British Gas is unable to do this. He told MPs on the Energy Select Committee that he would struggle to answer if asked what he paid for his gas and electricity.

Once the tariff price that customers pay for their dual fuel – whether it be their electricity, green fuel or other type - becomes the currency that is talked about, Ofgem’s idea is that price competition on default, standard tariffs will be more effective.

More customers will have the confidence to switch to these standard, widely available lowest tariffs, or energy companies might even be forced to move consumers onto lowest tariffs by legislation.

full article

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