BBC News | BUSINESS | Inquiry into energy provider loyalty

BBC News Online: Business

Friday, 19 November, 1999, 22:36 GMT

Inquiry into energy provider loyalty

The Department of Trade and Industry is to launch an investigation into why so few gas and electricity consumers have decided to change their supplier since the markets were deregulated.

Consumers are being confused, misled and bullied so it is little surprise that many choose to stay where they are.
NECC chairman Rodney Brooke

Only five million out of a possible 14 million gas consumers and four million out of 22 million electricity users have swapped supplier - despite the prospect of saving Ł85 a year.

Experts believe those who decided not to change supplier had a "better the devil you know" attitude.

Industry watchers say suppliers have failed to convince consumers of the merits of switching and customers remain largely complacent.

Sharon Darcy, principle policy researcher for the Consumers' Association, said: "We are looking at a combination of factors at the heart of why people are staying with their current suppliers.

"Consumers are confused by the marketing and they don't know whether they are being offered a good deal. Many feel their current supplier offers a satisfactory service, so it is a case of better the devil you know."

Comparative data needed

The National Electricity Consumers' Council (NECC) has called for a common indicator to be introduced to help users compare offers.

Clear information is needed to allow customers to compare the tariffs and offers available from more than 20 gas and electricity suppliers. The information needs to be produced by an independent body like watchdog Ofgem.

The NECC said companies were guilty of using misleading adverts, employing salespeople who use inappropriate techniques and making errors in the process of transferring those customers who do swap.

NECC chairman Rodney Brooke said: "There have been cases where salesmen are forging signatures on contracts and where vulnerable and elderly consumers have signed up to things they don't understand and end up saving nothing.

"These are isolated cases but they give the industry a bad name when you add to that the fact that people are being transferred without signing up and others are signing up only to find their contracts have been made void.

"Consumers are being confused, misled and bullied so it is little surprise that many choose to stay where they are. That is a real pity because competition is there to work in their favour."

Mike Alexander, managing director of British Gas Trading said: "Over eight million customers, or nearly one-third of British households, have already switched one fuel supply provider in the competitive market.

"However competition should not be measured simply by the numbers of consumers switching supplier.

"Competition is all about choice - and that includes the choice not to switch. Most gas customers are satisfied with the service from their current gas supplier.

Related to this story:
Utilities face tough regulation (17 Nov 99 | The Economy)

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