Out-Law News | 13 Oct 2011 | 2:21 pm | 3 min. read
Which? said that an undercover investigation had revealed evidence that energy companies do not always tell consumers about the cheapest deals they are eligible for.
The watchdog said its researchers called the UK's six biggest energy suppliers 12 times each in the space of a week asking for the cheapest deals and discovered the companies did not provide information on their lowest-priced tariffs on nearly a third of occasions.
"Despite clearly being asked for the cheapest deal, in nearly a third of the calls the firms failed to offer their cheapest tariff," Which? said in a statement.
"Staff also gave questionable advice about potential savings, cashback deals and fixed prices," it said.
Researchers called npower, E.ON, British Gas, Scottish Power, Southern Electric and EDF Energy, Which? said.
Staff at Southern Electric only gave researchers information about its cheapest deals during three of the twelve calls made to the company, whilst staff at Scottish Power providing information on its cheapest tariffs on all but one occasion, Which? said. E.ON, npower and British Gas staff provided details about their cheapest deals 10 times but EDF Energy did so on only 5 occasions, the watchdog said.
The energy companies did not always answer calls within two minutes and did not always provide information about "exit fees" they would charge consumers to cancel contracts, Which? said. The companies sometimes gave conflicting advice about "fixed-term" contracts, it said.
"Across all the companies, one third of the salespeople did not mention relevant exit fees, and Scottish Power failed to reveal its £51 exit fees in nine of the 12 calls," Which? said.
"British Gas staff offered its cheapest tariff in ten of the 12 calls but offered wildly varying cashback deals alongside this tariff, ranging from £0 to £175. Offers varied significantly even within the same region – a caller from one London postcode was offered £125 cashback and another was offered nothing. Some salespeople gave conflicting advice on fixed-price tariffs. One advised signing up to Scottish Power’s three-year fix because it was so long while another recommended its one-year fix because it was so short," it said.
Which? executive director Richard Lloyd said the research findings were "unacceptable".
"If you call an energy supplier asking for their cheapest deal, that's exactly what you should get," Lloyd said in a statement.
"It’s unacceptable for sales staff to give information that’s plain wrong or confusing. Giving the right advice to customers about switching matters more than ever when so many people are struggling with escalating fuel bills and colder weather is starting to bite. Which? is talking to the energy companies involved about sorting this out, and we hope they will do so quickly. This is one way the energy industry could start rebuilding trust among consumers," he said.
Lloyd advised customers to "insist" on companies detailing their "cheapest possible deals" and to ask about extra costs and discounts.
"Check for exit fees and ask about paying by direct debit or managing your account online as this will usually get you a discount," Lloyd said. "Or compare all the available offers using an independent comparison website or phone line to get the best deal. Switching is actually much easier to do than you might think and can save you money," he said.
Ofgem, the UK's energy regulator, said that it wants to make changes to the way energy companies offer tariffs to make them easier to understand. It said companies that do not offer consumers the cheapest deals could have their licences to sell energy revoked and may be in breach of consumer protection laws.
Unfair and misleading business practices are prohibited by the Consumer Protection from Unfair Trading Regulations (CPRs). The regulations are enforceable through the civil and criminal courts.
"Ofgem wants to cut out complex and confusing tariffs so that it is easy for all customers to see the cheapest tariff for each supplier," the regulator said in a statement.
"It is possible that the examples Which? found where suppliers did not offer the cheapest tariff when asked could potentially be a breach of a licence condition compelling suppliers to be more proactive in preventing misselling both face to face and over the phone. It could also be a breach of consumer protection legislation. We need to examine this information carefully. Ofgem is already investigating whether EDF Energy, npower, Scottish Power and Scottish and Southern Energy are complying with this licence condition," Ofgem said.