Complexity 'hinders bill savings'

The NAO reviewed markets worth £46bn a year

Complex tariffs still make it tough for some vulnerable people to save money by switching the suppliers of their household services, says a review.

Competition in UK energy, telephone and postal markets has increased now customers are able to switch suppliers, the National Audit Office (NAO) found.

But regulators need to work together to protect consumers, it said.

The three markets have been deregulated over the last six years and are now worth a total of £46bn a year.

Between 2002 and 2006, Ofcom, Ofgem and Postcomm removed retail price controls in markets that had previously been dominated by a few big suppliers.

Tim Burr, head of the NAO, said: "The removal of price controls is an important step in the development of competition in these markets, but it is not the end of the story.

"Ofcom, Ofgem and Postcomm need to be vigilant, and be prepared to use their other powers when necessary, to ensure genuine competition is present and that it is working to serve consumers."

Review

The NAO reviewed energy and telecoms services serving nearly every household in the UK since deregulation.

Some customers' supplies were more expensive since switching

It said the previous monopolies had lost market share to competitors, but were still in a strong position by holding around half of the market.

Prices for retail customers in fixed line telephony had fallen, but energy prices have risen owing to underlying costs.

About half of energy and fixed line phone customers have switched suppliers since competition was brought in.

Research suggests 90% of those found it easy to do so. Some 77% of business customers who changed postal services said they would not face barriers if they did so again.

Comparison concerns

However, the NAO raised concerns over the lack of "easily accessible, trustworthy, relevant, understandable and comparable information" for consumers wanting to switch.

One study suggested that this had led to 20% to 32% of electricity consumers, who had hoped to save money, ending up switching to a more expensive supplier.

Regulators were taking action to improve available information but had different views on how proactive they should be, the NAO report said.

It said there was scope for regulators to share ideas and run joint projects on finding out how low income consumers participated in the new open markets.