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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 Ashton says:
4 May 2016

Marketing letters would not make me switch to another supplier. It needs an independent unbiased body (such as Which) to show all the comparisons so that the consumer can make a decision.

Guest

Which? Switch should do that, although it does get paid by some of the successful energy suppliers if you switch through their site. I’d suggest once you’ve chosen, deal direct.

Guest

Hi Malcolm (and as information for others on how Which? Switch works)

Which? Switch displays all available tariff information for energy suppliers both large and small, even if we don’t currently have a commercial switching agreement with them.

Which? Switch receives a flat commission of between £15 and £45 when people switch energy suppliers using our service. This is to cover the costs of running the site but is also put back into running our campaigns on behalf of consumers. Regardless of whether Which? Switch receives commission makes no difference to where the results appear in the tables, meaning you’ll always be able to find the best deals.

Guest

Thanks James. I have always understood Which? displays all providers. I have used it regularly and have recommended to others in these Convos who seem to find difficulty sourcing competitive tariffs to use it. It is easy to use.

I understand the need to cover the costs of running the site. My belief is that we should have one totally independent site (as Which? is) but run by Ofgem, and publicised more widely than Which? is able to do. There would be no need for commercial energy comparison sites.

Guest

It requires a complete overhaul of an unfair system thats treats people like pawns

Guest

The tarifs are almost the same and the standing charge rounds it off to nearly all the same if the tarif is lower we really have to stop acting like fools if we dont want to be treated like idiots

Guest

I checked Which?Switch for a medium energy user – 3100kWh electricity, 12500 kWh gas – looking at an annual bill.
The charges ranged from £726 to £1358. There were 134 offers:
– 25 less than £800,
– 33 between £800 and £900,
– 15 between £900 and £1000,
– 56 between £1000 and £1100.
There will be many people paying more than the lower groups who would benefit from switching.

All tariffs are not the same. So it pays to look around. Just type Which?Switch into a search engine or look on the Which? website. Have your predicted annual consumption or annual spend to hand, your current supplier and tariff (probably on your bill) and you can easily see what you might pay. It is easy and can be financially worthwhile for the little effort involved.

Guest
Gerard Doherty says:
8 May 2016

Something’s should not be in the hands of private industry in particular energy, drug and medicine development and health services

Guest

At last a sensible idea

Guest
J S Smith says:
9 May 2016

The issue is the way in which the main suppliers rig the market in the first place. How they have taken advantage of the fact the regulator had any of its teeth taken away by the inaction of Tony Blair when he failed/chose not to sign to keep the regulator’s power to properly monitor & set prices if need be as & when the opportunity to do so crossed his desk at the alotted time as due from the original deregulation/privatisation legislation… Gimmicks such as getting the suppliers to pay for insulation or share customer details to allow direct marketing providing the cheapest deals are just that ‘gimmicks’ which play to the advantage of the main suppliers reinforcing their ability to rig the market…

Guest

Yes comparison sites are part of the problem not the solution

Guest
Paul Warrington says:
11 May 2016

Keep looking….. I had dual fuel with EON for a good few years. Every time I checked for a better deal, EON proved at least equal. Suddenly (May 2016), I find a whole bunch of suppliers offering significantly better 1 year fixed tariffs than EON. Saving about £400 from a £1300 annual bill for a semi is a no-brainer.

Keep looking…..

Guest
Alan Stanley says:
13 May 2016

It should be made lawful for suppliers to allocate the cheapest rate to each customer, failure to due this should be made a criminal offence.
Let’s kick this ” Profit by deception ” into the “Long grass” forever.

Guest
MIKE pARKER says:
16 May 2016

IT WOULD EASIER FOR ALL IF THE ‘DAILY CHARGE’ WERE INCORPORATED IN THE ACTUAL FUEL PRICE. THIS WOULD MAKE IT EASIER FOR EVERYONE TO WORK OUT THE TRUE COSTS AND SO WHO TO SWITCH TO >

Guest
dieseltaylor says:
31 May 2016

So if I use very little gas and electric because I am out at work then down to the pub I will pay very little of the cost of the infrastructure like the pipes and cables that provide the power.

Fortunately my neighbour with the three children, their washing, and an elderly parent to keep warm will be paying extra on every unit of power she uses. Seems brilliant to me.

Guest
Michael says:
16 May 2016

The issue I had recently was that my tariff was coming to an end and they sent me an estimated quote which was at least 10% less than my actual consumption, and this was very missing leading as you look at the monthly cost and think it has reduced, when in fact it had not.

Guest
Howard says:
18 May 2016

Why do companies feel they can just change or increase any monthly payment plans at a whim based on forecast and assuming what customers will be using. There needs to be more control on this by the regulators . Let’s have fairer pricing and then we would not need for all this switching and inconvenience .

Guest

If your payments are predicted to be less than your energy use then it is better to have an increased monthly payment now to cover it, than to be faced with a big shortfall, and big payment, in a few months time, surely?

Guest
carol jones says:
22 May 2016

I think all energy companies need to start putting coustmers first if it was,nt for costumers they would,not have jobs and they need to start lowering prices customers are important to your bussineses think about that for awhile

Casey jones

Guest
John barber says:
23 May 2016

I think the big Six & others need to reduce there prices a lot ,I know they need to make a profit to invest there business but they still make loads of money without ripping us customs off . It’s about time they were made to pass on some of there profits to us .
John.

Guest
Richard Andrews says:
25 May 2016

Switching would be ever so much clearer if Gas and electric was sold on a standard unit price-
If say petrol was sold in the same way-“tell us the cc of your car and your yearly mileage” we will tell you the cost of your petrol for the year–The Price per Litre is just so simple in order to choose which supplier to go to.

Guest

No comment.

Guest
Kate says:
31 May 2016

An international survey studied the most influential element of everyday life that contributed to happiness. The conclusion was that in countries where people felt they could trust other people, organisations, politicians, bankers, providers of essential services (utilities, health, police etc) there was a greater degree of individual happiness. In the UK we definitely no longer trust, therefore we are an exceedingly unhappy nation, and increasingly one without any moral compass. The energy providers cannot be trusted to provide their service at a fair and reasonable price. They would rather benefit financially from the least wealthy members of society. Without trust we will continue to have a spiralling gap between the poor and the rich. is this a society that we can be proud of?

Guest

Long ago we could (to a certain extent ) Kate ,but you are right the general public are being “processed ” from childhood upwards into a totally consumer oriented society that profits the 1 % . Its now so blatant that children leave school unable to read/write/maths etc but can spot a “Big Mac ” a mile away . What kept children happy in my day like long walks in the country , cheap comics etc would be looked on with scorn nowadays and even a chap on the door from child protection would occur. Its only getting worse Kate as the drive to change us into 2nd class Americans (without the US legal backing ) is going on as we speak. Its time somebody stood up for us not BB otherwise being British will have no meaning in the blur to becomes “consumerists ” .

Guest

Do you think it likely that if we detach ourselves from Europe we will succumb even more to the bad influences of America? That worries me more than all the other horror stories being peddled.

Guest

John this is a massive problem with me I have spent my life in single direction mode but I am presented with two negatives which is the lesser of two evils . The EU wants to implement TTIP and the Canadian equivalent which transfers sovereignty to the US ( by proxy ) and I dont like all its rules . On the other hand cameron wants to do away with EU Human rights Act saying it gets in the way of business which would happen if we come out . But Obommer insists we stay in as his bottom line is he wants to keep the EU in one piece as its easier to control than separate states which might turn to Russia as he is about to declare war on it (not kidding ) all for the sake of profit nothing to do with Crimea he wont allow a business competitor worldwide .The real facts are that the US dont look on Britain as any sort of “equal partner ” only a means to an end and if we come out he will make life hard for us. by sanctions -trade barriers etc. There is a lot going on behind the scenes at the moment I am “just ” for staying in but its waver thin and I have never been that way in my life so I dont feel good about it . Could you put some points so I can get another persons viewpoint on this . Your right about America it isnt really “our friend ” unless you like a friend who always wants money off you. I hate US influence but the problem is the younger generation who dont know any better its them I worry about many dont even feel if they are male or female ( I have a lot more on that ) they are so easily influenced by propaganda that they don’t even relate to being British .

Guest

I was just wondering whether if we divorce from the EU we could so easily be caught on the rebound by the USA, not just on political and strategic issues where we still have a tongue in our head, but on those more subtle cultural and behavioural aspects of everyday life that are outside the scope of governments. It largely depends also on how our current European partners regard us; they could make life easy or make it difficult for us if we choose to leave – we just don’t know. Some friends have commented that the beauty of voting to stay in is that it is not necessarily our final answer whereas the alternative is.

Guest

I see that energy prices have been dragged into the EU Referendum debate with the Leave camp arguing that it would all be so much fairer if the UK was free to take VAT off fuel prices. This is so disingenuous coming as it does from leading politicians from both sides of the House. They know full well that the biggest problem and most regressive part of the price of energy is the raft of government levies and obligations that are piled onto the suppliers’ price structures and on which – to add injury to insult – VAT is then added: a tax on a tax. Furthermore, nobody has suggested how the loss of this revenue would be made up, except presumably as part of the mystery money that the country would save by leaving if everything turns out alright in the end. I am trying not to take sides in this debate on this forum but I am increasingly annoyed by the nonsense being spouted by politicians from both the In and Out departments and this has angered me more than the rest. They must think we are all fools.

Guest

Your right John I feel as if my intelligence is being insulted by both sides too. They get more and more ridiculous as the rhetoric just increases in volume and stupidity it just shows the lengths they will go to ,to influence the public. Into Disney Land and Fairy Tales

Guest

Well, I certainly wouldn’t insult the Walt Disney company by making that comparison, and Fairy Tales suggests something warm and positive. Grimm might be a better option, but both of you raise an interesting thought: why do we not have a topic devoted entirely to the pros and cons of EU Membership? It’s pretty relevant to the consumer, to put it mildly.

Guest

Ah ! Ian but would Which allow it as it would be political ? I would love it to happen though and as the June date gets nearer Which would be assured of a record number of posters on one Convo.

Guest

“Tales of Mystery and Imagination” springs to mind. I find the public utterances of politicians almost unbelievably puerile in the EU debate in particular. There are no known outcomes, whether it is the economy, migrants, or whatever populist frightener these children seek to shout at us. Without facts we all need to follow our instincts.

It may be that if we do vote to leave, those disappointed by the decision could migrate to Scotland if it becomes independent and chooses to stay. I might join them. 🙂

However it is the EU that requires us to put vat on energy bills (including all the government add-ons that effectively adds a tax on a tax) but we have chosen the minimum allowed – 5%. I reckon that amounts to around £1 billion a year for domestic customers (??). For those who would like the tax removed we must elect where the loss in revenue should come from.

Guest

If I may veer off topic to add colour, I was amused to see that brewer Daleside has produced a couple of topical beers: ‘EU In’ and ‘EU Out’. I sampled one of them.

Guest

The European standard for testing rain ingress into outdoor products is very specific in the design of the machine, nozzles, water pressure and volume flow used to produce the test spray. When demonstrating the test to visitors we referred to it as “Eurain”. Hopefully your beer isn’t (well, the “out” may be. 🙂 )

Guest

As far as I know, standards for water ingress apply only to new products. Many will be familiar with the 16 amp plug and socket – blue for 230 V and yellow for 110 V (as used on construction sites). They are all rated IP44 (splash proof) and no doubt conform to some standard but I have yet to find one where the socket cover continues to close properly after extended use. Either the spring fails or the plastic bends near the hinge. Some designs have decent strain relief and a waterproof cable gland but commonly the cable is just poked through a bit of soft rubber and if there is a seal it does not last long. Anyone involved with producing or reviewing standards should look at commercial products and identify obvious weaknesses. Products should obviously comply with standards throughout their working life if not abused.

The ‘EU In’ beer was OK though I would like to renegotiate the recipe to achieve a higher hop content. I did not have the energy to try the ‘EU Out’ version. I think we are off-topic. 🙁

Guest

To conclude this off-topic, if I may. Products subject to testing also have to go through an endurance regime where they are subjected to environmental conditions above the norm for an extended time. This is to simulate the effect of ageing. In my experience it worked very effectively for the outdoor products we manufactured.

I watched Andrea Leadsom – minister of state for energy etc – in front of the energy select committee yesterday; nothing else on tv worth watching. She was asked about the timescale for EDF’s nuclear power station – there isn’t one, it’s “a commercial decision”, we haven’t put a deadline on it, but a lot of work is going on at the site – hedgehog tunnels have been built and bat preservation measures in place. What about energy security if it is not completed? We have a wide range of sources – wind, gas, solar, – and encourage more gas fired generation. As Hinkley Point should, if ever built, supply 7% of our electricity I wonder how quickly the gap could be filled if it fails to go ahead? Ah, insulation and other energy saving methods are reducing our needs – but isn’t gas for cooking and heating supposed to be frowned upon so where is the electricity coming from to replace it? Or is CO2 control not really an issue.

All in all it was a poorly prepared, unconvincing and defensive response to valid questions. For those who think government can handle these sorts of issues I’d keep an eye on this commttee.

Guest
Mrs Margaret Little says:
5 November 2016

Writing as an 83-year-old, I have been endlessly pestered with telephone calls by an energy company whose name I cannot even remember – mostly because the caller usually identified himself simply as “Colin” and whose only mode of customer recruitment seemed, indeed, to be by telephone. Requests to be sent this company’s – sensationally low – price comparison information by post were ignored. Twenty-five minutes into their third weekly call I hung up on this company – if such it was – because my BANKING details were being asked for over the telephone.
Is this a normal way for these cheaper providers to conduct their business because, if so, one can hardly wonder at their being less expensive?

Guest

This is known as “high pressure salesmanship ” or the modern version of a salesman’s foot in the door to stop you closing it. Did you get their telephone number Margaret ? that would prove if it was a scammer . If you remember their name I will check up on the company, if it is British based. Can you afford a call-blocker Margaret ?