Ofgem, the UK’s gas and electricity regulator has today launched an investigation into four energy suppliers (npower, ScottishPower, Scottish and Southern Energy and EDF Energy) to determine whether they are complying with new obligations to prevent mis-selling. The investigation covers not just doorstep selling, but also the telesales activities of these companies.
In 2008, Ofgem undertook an investigation into the functioning of the UK’s domestic and small business gas and electricity markets (the Energy Supply Probe). A survey for Ofgem’s probe showed that more than one in two people switching did so in response to contact with a salesperson. However, the survey found that many who switch on the doorstep inadvertently move to more expensive tariffs perhaps because they are misled or unable to accurately compare tariffs (1). Staggeringly, the Ofgem survey found that 48% of gas switchers and 42% of electricity switchers ended up paying more as a result of a direct sales approach (2). Even worse, the survey found that vulnerable and prepayment meter consumers are more likely to switch via this route and so were particularly disadvantaged.
As a result of that probe, Ofgem introduced, on 18 January 2010, new measures aimed at preventing mis-selling. Measures include a requirement for energy suppliers to provide customers with written estimates before any direct sales are concluded. This is designed to help customers compare the tariff they have been offered with their current deal.
Ofgem is now investigating the activities of 4 of the larger suppliers to see if they are complying with the new obligations.
What we think:
We support what Ofgem is doing. There is no point introducing new measures to protect customers from unscrupulous salespeople, if you are not going to check from time to time that the measures are being complied with.
Because this is an investigation at this stage it should not be assumed that these suppliers have necessarily broken the rules. However, because not all suppliers were being investigated Ofgem must have some grounds for investigating these suppliers in particular.
Deal with energy salespeople, whether on the doorstep or over the telephone, at your peril. They have no requirement to offer you the best deal or even a better one. The Ofgem probe found that many customers who switch via a doorstep salesman end up on a more expensive tariff. The Ofgem measures introduced in January, where designed to prevent customers getting ripped off but even that is now in doubt. Those measures will not however help anyone secure the best energy deals.
There are 3 key reasons why new rules will not help doorstep or telephone switchers get the best deals.
- Firstly, energy supplier agents represent just one company. They do not have access to all the best deals for any particular customer.
- Secondly, and more importantly, the best deals are only available over the Internet for customers who pay by monthly direct debit. These deals are not in any case available to doorstep switchers.
- Finally, energy suppliers do not subscribe to a code of conduct that requires them to make 100% unbiased or comprehensive comparisons. It is questionable whether the comparative quotes provided under the new rules will be up to date, accurate or comprehensive.
To help consumers avoid the pitfalls of dealing with energy salespeople, TheEnergyShop.com has put together a 6-point checklist to help customer avoid getting ripped off on the doorstep and on the telephone.
Tips to Avoid Getting Ripped Off at the Doorstep or on the Telephone
- If you are approached by a doorstep salesperson, first check their identity. They should carry an official company badge giving their name and the company that they represent. Take a written note of these details.
- Get the written quotation before making any decision to switch. Once you have the quotation DO NOT get pressurised into signing up there and then. Instead, arrange for the agent to call back at a later date to suit you.
- Check out the quote you have been given using a Consumer Focus accredited price comparison website such as TheEnergyShop.com. The sites are 100% impartial, show all deals from all suppliers, and are regularly audited to ensure that they are accurate and up to date.
- Do NOT show the salesperson a copy of your energy bill or allow them to come in to read your meter. These have been some of the tricks used by unscrupulous salespeople to get important details about your supply and to switch you without your approval.
- Take similar precautions when you receive a telephone call either from an energy supplier, a price comparison service or someone claiming to work for either. First check that the call is genuine before proceeding any further. If it appears to be genuine, take down details of the quote provided but do not switch without first checking alternative offers using a Consumer Focus accredited price comparison website. Please note that if the call is made from overseas, your personal data may be shipped abroad if you decide to switch and give your personal details to the agent.
- If the salesperson offers you a special deal that you can’t get anywhere else be extremely careful. If you can’t find the deal on a price comparison site it either doesn’t exist or it is extremely expensive meaning the energy supplier doesn’t want you to see how it compares.
(1) Ofgem Factsheet 82: Ofgem’s probe gives energy customers more muscle – 19/09/2009.
(2) Ofgem Energy Supply Probe – Initial Findings – 6/10/2008