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Would marketing letters from energy suppliers make you switch?

Letters through door

Our latest research casts doubt on whether the CMA’s proposals to share customer data will encourage people to switch energy suppliers.

Two weeks ago the Competition & Markets Authority (CMA) published its final verdict on the energy market and its proposals for fixing it. When we asked you whether you thought these proposals were enough to fix the broken energy market, an incredible 25,741 of you voted ‘no’ (93%).

I want to focus on one of these proposals – the creation of an Ofgem-controlled database of customers who’ve been stuck on their supplier’s standard tariff for more than three years.

This would then allow rival energy firms to send letters to people (who haven’t opted-out to being contacted) with new deals and tariffs.

The CMA hopes this will encourage more people to switch supplier. But we’re not convinced.

A central database of energy customers

The CMA’s suggested measures to safeguard people’s data. It has also said there’s trade-off between ‘encouraging more switching and ensuring customers aren’t subject to excess or misleading marketing from firms’.

With 37 energy suppliers out there, there’s the potential you could be contacted by 36 separate companies encouraging you to switch.

Will this increase switching?

The question on everyone’s lips though is; will this work?

We surveyed the very people this proposal is aimed at – energy customers who haven’t switched supplier in three or more years. How would they view letters from rival firms?

  • Four in ten would opt-out of receiving marketing letters in the first place.
  • A third said they’d put letters straight in the bin or would just scan them quickly.
  • Almost half said they’d be unlikely to switch if they received a letter from a rival supplier with cheaper deals. Instead, they were far more likely to switch if their tariff increased or if they’d had a poor experience with their supplier.

The CMA still has until the end of June to finalise its remedies to fix the broken energy market. With two months left, the proposal for a central database needs some careful consideration. Will it increase switching or will it just lead to loads of unwanted letters through our doors?

And just to add, while most of us don’t currently get many marketing letters from rival energy firms, just 4% of people asked said they’d switch due to receiving one. It might not just be letters though.

Our supporter Richard is worried about cold calls:

‘The idea to set up a database of customers who have been on the standard energy rate for more than three years is ridiculous. All it will do is to open up the incidence of scam telephone calls and cold calling by unscrupulous companies.’

Your verdict on letters and databases

Now we want to hear from you. With an incredible 416,000 backing our Fair Energy Prices campaign, we need to continue pressing for a market that protects the most vulnerable and stops people from overpaying.


So what do you think about the idea of a database of customers who haven’t switched for three or more years? Do you think letters from rival energy firms will encourage people to switch? Would you be happy if your data was shared with Ofgem and energy suppliers?

Comments
Guest
Allen France says:
28 April 2016

British Gas attempts to put my charges up every year, although in most years, except one, the direct debit did not cover the whole year. I asked if after paying this I could just pay the shortfall, if one occurs, and after agreeing initially they say they could not do it. The direct debit they wanted to take out would raise my monthly payment from £45 a month to £73 pound a month for owing at the end of the year £26. They seem determined to get to this figure, even though on my income I’ve told them I cannot afford to heat my home. We settled on £50 last year, but now they have raised my monthly direct debit to £66. This comes from nowhere and despite the fact that I am in credit. It is useless trying to speak to them. I tried that years ago and could get no sense out of them. I have noticed that in recent years gas prices from British Gas have gone down fairly consistently, while little has changed over the price of electricity. They will not change anything these energy companies if they believe they can get away with it. So far they are doing rather well.

Guest
Ruth Jenner says:
28 April 2016

Some 14 months after switching from Scottish Power to OVO, we have only JUST received a final refund for the overpayments Scottish Power took … and this would never have happened without the help and intervention of the energy ombudsman. Scottish Power kept our electricity account running for five months after we’d switched to OVO, and they STILL expected us to pay for it even though OVO were supplying both our gas and electricity. The ‘Big 6’ behave like they are a law unto themselves, and I am grateful that there are organisations like Ofgen and the Energy Ombudsman around to punish them hard when their transgressions get out of hand.

Guest

I used to be with Scottish Power and moved to Ovo. Although I had a dual fuel account with SP they split it into two accounts when I was moving to a dual fuel account with Ovo. SP refunded the credit balance for one of the fuels and I had to chase them to refund the other. It’s early days but I cannot fault Ovo so far, so I hope it works out well for you too, Ruth.

Guest

I believe splitting into two accounts is necessary because electricity and gas are separately registered in a central data base that is independent of the supplier. So the accounts may be moved at different times to your new supplier.

I’ve just moved to GB Energy from SP. Early days but the move went smoothly and it was quick to arrange. The only problem I had with SP was that whenever I changed to one of their better (cheaper) fixed price accounts as they came along they did not take a month’s DDR as they were setting up a new one to reflect the different cost. Not what I wanted as I gradually built up a significant debit. I did tell them but their system appears intransigent.

Guest

Thanks for the explanation, Malcolm. It would have been good if SP had explained this. It was the first clue that indicated that they were aware that I was leaving them.

Still no problems with Ovo except that they once put down my meter readings as estimated when I had supplied them promptly after their email request and received email acknowledgements. With the new house, the sellers were with e.on and it seemed easier to stay with them at least in the short term. After seven weeks they are still setting up my account according to their website.

Guest

I’m sure you’ll use Which? Switch to get the best deal when you settle in. Have they given you their annual usage? Somewhere to start from unless you are good at estimating gas heating. I imagine electricity will be similar to where you have left.

I hope you will be happy in your new home. I like gardening, and seeing what pops up in the first year can be quite exciting – or very depressing.

Guest

I was only visiting for the first month so we agreed that the best solution would be to put me down as a low user, but that can be changed when necessary.

I have inherited a smart meter so might now be able to make informed comment about them. I still feel that anyone who wants one should pay for them rather than inflicting the cost of the roll out on us all. The smart meter did help in one way. I could not understand why I was using a significant amount of electricity and there was no fridge, freezer or anything else to account for the consumption. Then I discovered that the radiator in the conservatory was in fact an electric heater designed to look like a conventional double panel radiator. The vendors or estate agent had switched it on for me and it was several days before I found out. 🙁 I must play with it because it could stop working if I switch supplier.

The house is bigger but the garden is more manageable and mainly shrubs plus some trees and I will update on the tree saga elsewhere. As you say it’s interesting to gradually learn what’s in the garden. So far it’s exciting, though I don’t know where I will put everything that I’m moving out of the large loft in my bungalow. The rear of the new house faces south so solar panels would cut down the energy bills but no-one nearby seems to have them. There are other priorities.

Guest

The point is energy is too expensive and all this counting this and calculating that plays into the hands of the companies -its part of the problem not the solution

Guest
Cynthia A