Energy firms 'failing to help customers off expensive tariffs'

Energy companies are failing to help their customers off the most expensive tariffs four months after an inquiry found consumers are collectively overpaying by £1.4 billion, a survey suggests.

Three-quarters of people (74%) say they have not been contacted by their supplier about changing their tariff in the four months since the Competition and Markets Authority (CMA) concluded its two year market investigation, the poll for Which? found.

The competition watchdog warned in June that 70% of people were on the more expensive “default” standard variable tariff, costing consumers £1.4 billion more than a competitive market.

Which? said suppliers were in the “last chance saloon” and challenged them to show how they were engaging with their customers stuck on the worst deals.

Around 16 million people – more than half (58%) of energy customers – are stuck on standard variable tariffs with a “Big Six” provider, the default and usually most expensive tariff, Government figures suggest.

Which? also found that nearly nine in 10 people (86%) think it is their energy company’s responsibility to help them understand their energy usage and 89% believe it is the supplier’s responsibility to make sure they adequately understand their bill.

It is calling on all companies to find new ways of getting customers stuck on poor value deals to move and is challenging them to publish plans by January 31 next year detailing how they will engage standard tariff customers.

The watchdog said it will be publishing a scorecard to track the responses from the energy companies and said the Government and the regulator “must be ready to act if companies fail to deliver for their customers”.

Which? managing director of home and legal services, Alex Neill, said: “This is the last chance saloon for the energy industry.

“After a two year inquiry, the energy companies now must prove they are taking action to genuinely engage with their customers stuck on the worst deals.

“The Government and the regulator must be ready to act if energy companies fail to deliver.”

Ofgem said: “Ofgem is working to implement the CMA’s remedies as quickly and effectively as possible as part of our wider reforms to deliver a fairer, more competitive and smarter energy market.

“We want suppliers to engage more actively with customers, particularly those on standard variable tariffs, to help them get a better deal. This month for example we began a consultation on requiring suppliers to take part in trials to test the most effective ways of doing this.

“The large suppliers have already seen their market share fall from 99% to less than 85% in four years. Suppliers who do not engage with their customers to offer them better deals risk losing more customers to rival suppliers who do.”

The CMA said: “We’ve recommended that Ofgem continues to work at increasing customer engagement through information, prompts and other communication. It’s important to test beforehand which measures will work most effectively with customers, so we have also recommended that suppliers are required to participate in such trials.

“In addition, we are also targeting help for those customers who have been on the most expensive tariffs for more than three years. Energy companies will now be required to supply the details of those customers to Ofgem so that, under strict controls, other companies can bring cheaper deals direct to such customers based on their actual energy usage.”