In a series of three blogs, I’ve been explaining what Ofgem’s Retail Market Review reforms are and how they will affect customers. So far, I’ve covered the “simpler” and the “clearer” parts. In this final instalment, I’m looking at what Ofgem is doing to make the market “fairer”.
“Fairer”
It should perhaps go without saying that any business should treat its customers fairly. But when the product you are providing is one of life’s essentials, it’s even more important to make sure that customers can have complete confidence in their supplier.
So the final part of Ofgem’s reforms focus on giving customers even greater assurances.
At the highest level, all major energy companies have signed up to new Standards of Conduct, which are enforceable conditions of their licences to supply energy.
These standards enshrine companies’ obligation to be fair in all of the different ways in which they engage with their customers, including making it easy for consumers to contact them and acting promptly to put right any mistakes. We are very enthusiastic about meeting and exceeding these standards and you can view our Treating Customers Fairly document here.
At a more practical level, Ofgem is also taking steps to protect customers. For instance, for fixed-term tariffs, it is banning price increases or other changes during the term of the tariff unless they benefit the customer – except for existing tracker tariffs (until they expire), certain types of indexed tariff or structured price increases that are set out in advance.
It will also ban companies from automatically moving customers onto new fixed term contracts when their existing term comes to an end. Instead, customers coming to the end of their fixed tariff will be moved automatically back onto their supplier’s cheapest standard variable tariff.
This is something we absolutely support and our simple tariff structure means it is very straightforward for customers to see which tariff they are on once their contract comes to an end. We’ll also give them plenty of notice of this in advance.
Finally, suppliers will need to work even harder to ensure that any information sent to customers has no potential to mislead or confuse them and relates to products or services that are appropriate for the customer receiving it. Energy is a complicated area, and even with the efforts suppliers are making to simplify things we know it can be confusing. So we agree that it is very important to make sure the information sent to customers is simple, clear and appropriate to minimise the risk of it being interpreted in the wrong way.
Overall, these are an ambitious, progressive set of reforms with many real, tangible benefits for customers. Over the next few months different customers may find that they are affected in slightly different ways as their supplier implements all of the changes, but over the long term the energy market will be better as a result of RMR.
If more customers find it easier to engage with their supplier and the wider market, understand products and services and can be confident that they are getting a fair deal, that’s good news for everyone.