/ Home & Energy

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

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I have to agree with Duncan on this one.

What planet do the CMA live on?

We have been harassed by nuisance callers on the doorstep and that has been made illegal. We continue to be harassed by nuisance telephone callers of which energy companies have been major contributors. Why on earth do they want to open the door for even more harassment? Are they so naive as to think energy companies will be happy just sending us a letter and hoping we respond?

Buying and selling of personal data needs to be made illegal. It is the only way to stop nuisance callers. Setting up another database of our personal information is a very disturbing proposal that will open the door to even more scams.

I get sick of phone calls and leaflet drops but I would like to see a ban on phone sales unless a phone owner has signed a for to agree to phone sales from a company (visually impared may prefer phone contact). I accept offers through the post or leaflet drops as many old people do not have the internet so this could be the only way they could learn about other tariffs for energy. I do all mine through the internet but object to my details being held on a database for any supplier to use, these things get abused even if controlled by the goverment.

linda says:
6 April 2016

I DO NOT WANT MY DETAILS SHARED FROM ANYONE TO ANYONE ELSE. I also do not want a load of leaflets coming through my door, wasting resources. There is too much paper flying about as it is.
Computers were supposed to save paper – save the planet – be green!!!!!
All they seem to do is generate more paper to come through the letter box, go to the paper bin, be recycled, etc. What a waste of resources time and energy.

Why is there this obsession that people have to switch supplier? There are plenty of TV programs, media articles, etc. that I can’t imagine there are many people who don’t know they can switch if they want to.

A well know fact…… A company reels you in with the promise of something cheaper, and it is for a while, then they put the price up and you are back to square one. Some people might relish the challenge of regularly finding the cheapest supplier and switching, but many don’t want the hassle.

A better suggestion that will save thousands of trees………. The CMA look at prices being charged by the energy companies, tell them they are charging too much, and force them to lower prices.

Excellent comments by Alfa but it seems far too sensible for those responsible to suggest such change and enforcement

I am tending to the belief that the CMA is actually a front for prevarication and public posturing.

However on this particular proposal it is perhaps a cunning move to make prove positive that most people cannot be bothered to move. Five years down the line and after the odd million letters have been sent they will discover it is cost ineffective. The wise suppliers may actually decide that it is not worthwhile from the off and simply not bother to write.

So stuff the data base. Make a smaller levy and pay Citizens Advice to employ agents to visit those people identified who by age, infirmity or lack of internet connection should switch or be given a disinterested parties view on the benefit of so doing.

The industry of course being tasked to supply a list of non-switchers and their usage data for use by the agents.

Cheap, focussed, and without the madness of a centralised mass- maelstrom

Simple unit prices that allow the cost of energy to be compared offer the best chance of people switching to cheaper suppliers. It works for petrol and loaves of bread, but in the 21st century we have energy pricing that is so complex that people use price comparison websites to decide where to buy energy from.

I cannot believe that anyone is seriously proposing marketing letters. Next it will be marketing calls and then we will all be complaining on Which? Conversation about nuisance calls from energy suppliers.

Let’s have simple unit pricing, scrap price comparison sites, and don’t even think about energy companies spending our money on marketing.

The unfairness of so-called “simple” energy pricing has been discussed in several conversations. In particular, the indiscriminate cross subsidy that would occur.

If those people capable of changing don’t bother to save the amounts claimed, I doubt another pricing system will make a substantial difference.

An independent price comparison site, such as Ofgem could host, might give consumers the confidence needed, with no commissions paid. However I’d still scrap fixed price tariffs and have fair variable tariffs for all.

Simple unit pricing may work well for bread and petrol, but most of us don’t enter into sole supplier contracts for those items.

Bread also isn’t a great example, because even a single shop can sell a wide range of different loaves – and we might want to buy the best tasting loaves, not the cheapest ones.

I remember a few months ago a comparison was made of energy prices for 1000 units of gas and electricity and the “Big 6 ” were within £15 of each other so why bother switching ?

I support what Alfa and DieselTaylor have said. The other thing that worries me is the use of the data handed over to the energy companies. The Intro says that the CMA “has suggested measures for safeguarding people’s data” and I am doubtful how reliable that would be. I cannot believe it will be possible for Ofgem to monitor effectively and control as many as 37 different suppliers should they all take up this opportunity [the smaller ones might be the most likely to as it has the potential to make a bigger percentage increase in their turnover than for the larger companies]. How long will this data be available for and will there be any time limits on its use? I am also doubtful how easy Ofgem will find it to get 37 companies to supply the data on time in the first place and then to process it for distribution [or making it accessible] to all the companies. After the initial hump of data there will presumably be a weekly trickle of names and addresses going to the suppliers as each customers’ three years on a standard tariff comes up. The suppliers would presumably cherry-pick their targets and issue a dribble of letters over a period of time [will they be allowed to issue more than one, or further ‘reminders’?], but the eager ones would act swiftly and customers could encounter a blizzard of mail. Obviously this is all so simple that nothing could possibly go wrong. A bombardment of propositions is the one thing most likely to end up with it all going in the bin. With no geographical relevance in the energy market any more there will be nothing to inhibit firms from contacting all customers listed so there is a real possibility of marketing overkill.

I must admit I was hoping that the CMA would recommend Ofgem to tell all companies to recalulate the bills of all customers who have been on their standard tariff for over two years, inform them of the comparisons, and offer to convert them [with a payback?] to the most favourable tariff in the applicable range [but with no automatic extension of contract term] within 28 days unless the customer objects, and then give them a free reversal option after the next quarterly bill if it does not work out in their favour.

There seems to be nothing in this proposal to help those who have been compulsorily put onto a prepayment meter at a higher tariff and would prefer to switch to a different supplier. This is a complex problem, and outside the strict confines of this topic as outlined by James, but it is worth thinking about.

I go along with Diesel’s proposal that there should be some dedicated impartial outreach to customers who have been on the standard tariff for two years or more. I think in the long run it would save the government money in welfare and other support and have the potential to lead to energy savings.

Hello John, although this particular conversation is about the proposed database, the CMA did propose the following for pre-payment meter customers: A temporary price cap to protect the four million vulnerable customers on prepayment meters, which would reduce their bills by a total of £300m a year. https://conversation.which.co.uk/home-energy/cma-energy-market-investigation-results-proposals/

And as we have discussed earlier, why should there only be a temporary price cap?

Ofgem have made proposals to deal with prepayment meter problems. It is worth noting that all the big 6 suppliers, I believe, offer prepayment customers the ability to switch to cheaper tariffs. Many smaller suppliers do not.

Thank you Patrick. I was particularly concerned over those pre-payment customers who are not there through their own choice [albeit possibly as a result of their own circumstances]. Should they not also be included in the database referral scheme in case one of the other companies that they might not have heard of can come up with a better payment arrangement for them? Or must they be trapped for ever with the company who has put them on the naughty step?

This is another attempt to wake people up to the realisation that they can save money by making a (very) little effort. However, marketing has such a bad name that I can’t support it. If, however, Ofgem publicised more openly the savings to be made by switching from standard tariffs maybe more people would take the trouble to act and save themselves money. However the evidence from work in the past seems to be that most people who are capable of changing, and have not, are “sticky” and can’t really be bothered to make the sort of savings likely.

There is, though, a bit of a fallacy here. If all those on standard tariffs were to switch to the cheaper fixed price tariffs, energy companies income would drop substantially, as would their profit margins. Therefore those savings would not last; fixed rate tariff prices would have to rise to maintain their profitability. So it would only be a short term saving.

Who wins by gambling on energy price changes that fixed price tariffs “guard against”? Not the consumer – they don’t have the knowledge. The energy supplier of course. So they are a sham really, subsidised by standard variable tariff customers. The answer is to scrap fixed term tariffs and have a fairly price variable tariff for all.

Harking back to the constant refrain for a single unit price and confusion it seems to me that it could be simplified by having the same fixed standing charge for every connection throughout the country. There will be winners and losers from this schemes but with all suppliers charging the same standing charge the only variable s will be the cost of the energy, their administration costs, and whatever any other thing the Government wants to throw on.

And to be very clear; infrastructure costs should be paid by all regardless of usage. With the rich more able to install solar installations for electricity and hot water, air-heat pumps for the underfloor heating and superior weather proofing – then they will be the ones who benefit most from a standing charge based on units used.

Hear! Hear! DT.

The National Standard Supply Charge has been put forward many times in various guises throughout these Conversations but it is good to see it put back on the table and clarified further as you have done.

I also agree with your idea to campaign vigorously against the compulsory smart meter policy, but I don’t think Which? supports you on that. The last thing I read was that there was still no agreement on a universal electricity meter standard [so that switching supplier would not require replacement of the meter as is sometimes the case]. Since gas is the biggy in terms of annual consumer costs perhaps the government should concentrate on that [especially since so many gas meters are ancient devices] and let electricity find its own way forward. Part of the smart meter rollout for electricity must include replacing even newish ones like ours [only three years old] which are not universally compatible.

The smart meter roll out is a done deal regrettably, and one that Which? seemed to support. There is to my mind no substantive evidence of benefit to consumers, other than automatically sending meter readings (I do mine regularly online as it is) and giving the ability to charge half-hourly tariffs. For people who can organise their electricity consumption at off-peak times this may save them money and benefit capacity control.

The main argument that by having a smart meter, and watching your consumption, you will somehow be able to reduce how much you use seems very dubious. If people can’t take the opportunity to switch to cheaper tariffs now I doubt they’ll work out how to make savings on their usage.

Those who want to monitor their consumption are probably already doing it or have requested a smart meter and monitoring device.

We should not forget that the £11 billion cost of installing smart meters will save the suppliers hundreds of pounds a week in manual meter reading costs. Just watch those bills come down!

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There shouldn’t be a standing charge. This is always abused (telephone companies and other services too). If I buy goods or services from other types of companies I don’t have to pay a seperate standing charge for their infrastructure – it’s all in the price of the things they sell. That’s the way it should be, fair across the board. I had to have my gas meter removed so that I didn’t have to pay a standing charge for a service I could not afford.

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While I may not agree with everything you have just written Duncan there is little or nothing you make mention of impossible and much of it is probable

The first things they will do is switch off your smart machines at times to lighten the load if the grid is getting it tight. . . .
I’m not entirely sure the smart meter is actually needed to do this as I’m informed the signal can be sent through the grid on the “0 Volts” part of the wave anyhow but a meter with a sim card or similar methodology could make targeting a lot easier
This is probably a good idea but many may not like it

My wife being typical walks in the door and fly’s around and within a couple of minutes every machine in the house is on. . .
This probably needs a little outside regulation because she ignores me. . . .but I’d rather argue with her as someone at the end of the phone. . . .
I try to run the machines one at the time in the hope our renewable’s will make the required energy
As we obviously have a limited amount of that it is better spread the load over time
What wifey is doing is allowing the import export meter to count export units which we get very little for in this case for most of the day and then by switching on every load available we import more than we are using and the import units are full price
She wont take time to understand the principle of import expensive export cheap power

It would be in the providers favour to stop our personal machines during the day or during high winds and take our cheap leccy and then allow the machines to run in the eve on a higher tariff. . .
Aside from that and for most people it wont mean any savings. . . .My view
It could be misused to push the loads into a more expensive time for those on variable tariffs which would not be nice but the providers would profit from such an action. . . .
There is little or no way to accuse them as they operate and control the system and can say as they wish
We have a large factory locally with two big turbines and the combined power of the turbines at peak is little more than the base load of the factory yet they were getting switched off through Scada system. . . .It took a load of complaints before this stopped. . . .The provider simply stood their ground and said the grid could not take the energy?? But the turbines were not exporting. . . . .The real problem was a massive energy user was not buying power

I dont like the smart meters. . I dont see any good reason to spend the colossal moneys unless it benefits the providers
There is more to this than meets the eye
If I could trust that the smart systems would only be used to lighten the loads as and when the grid was getting it tight that would be okay but I have not to date seen BB as honest as this

Just this week we see that precious few BB or big money people/families are as clean as they’d have us believe

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Duncan you are vindicated but I never disagreed with you on this anyhow. . . I’m just not as noisy about such things as many dont want to hear, , whether the duck quacks or not. . . .

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It’s a good job this made it into the public domain Duncan
The truth is good, , ,cover up’s are lies by another name and off shore whether legal or not is cheating us of our due’s in my eyes
There is nothing wrong with having BB. . . We need BB but simply standing watching them remove their profits is to me like sympathising with terrorism

I agree with you on many of your posts about such corruption and swindling of us
It is the man in the street and the small to medium business’s that are keeping us whilst the big names disappear with the tax’s that should be used to keep our NHS etc and the amounts are such that if the correct tax’s were even half ways paid we would not need to listen to another word about the NHS, , the education systems , , or the social system

But yes, , I think the public have selective hearing perhaps as a result of being bombarded by the idea that the big money money markets of London has a beneficial spin off and they are reaping the benefits of the spin off
In my eyes the only spin is the spin of the story

The real amount of missing tax’s is well beyond anything the public would believe and if this 11m documents tell the whole story there will be a lot of red faces

I cannot help but note that within a short time of the news breaking the knowledge about the Cameron’s was known but did not make it’s way onto the BBC news for a day or so?????

Duncan – I did not say the government was paying the cost of installing smart meters. But the government is requiring the energy companies “to install smart meters for their customers, and is setting out rules to ensure that they do this in a way that is in the interests of consumers, including rules around: data access and privacy, security, technical standards for the smart metering equipment, and meeting the needs of vulnerable consumers” [Gov.UK – Smart meters: a guide]. Some of the costs are being met through the amounts already being imposed on customers’ energy bills even though the roll-out isn’t really rolling yet.

I don’t think the energy supply companies will be able to make massive savings on the cost of reading meters; the savings just aren’t there to be made. I said ironically “hundreds of pounds a week” – obviously it will be more than that, but very few meters are read at frequent intervals by a meter reader. Customers enjoying discounts for direct debit and paperless billing on their contracts are usually expected to supply meter readings every month and many others do so anyway to avoid estimated bills. Otherwise meters are either read manually at annual intervals, or not at all because smart meters have already been installed in hundreds of thousands of homes.

Customers will no doubt be able to choose a tariff that allows for price variations at different times of the day and that might suit many people. I am sure constant-price tariffs will also be available for those who do not want the up and downs of variable prices. Suppliers will have to get the customer’s consent to access half-hourly data.

The other fears about smart meters and their security have all been well and truly aired in previous Which? Conversations so we are not sleepwalking into unknown territory. Luckily, with the American experience available ahead of the UK programme, potential problems can be dealt with in advance.

I can assure you that we were not ‘rich’ 20 years ago when we installed solar hot water tubes on our roof, we regarded it as an investment, akin to a conservatory or new patio, and so it has proved. My gas boiler is usually switched off in April and doesn’t go back on until September or October (unless we have a week of solid rain!), best investment we ever made and has lasted much longer than if we had bought a new car!

Red Herrings –

Is not the installation of smart meters the most contentious expensive idea of the Govts that could most easily be dealt with so that if a campaign is required we can get into gear now?

Last thing I heard was it was overly expensive and could be done aequately more cheaply. What is the situation?

Bertie says:
5 April 2016

What all the current energy companies need is a great big kick up the backside. What we, as consumers need, is the choice to opt for cleaner and greener energy sources that aren’t killing the planet. Let’s stop pussyfooting around and demand a more sustainable energy supply for all. Oh and – no! It’s an outrage to propose we all give our personal data to these companies….. Who do they think they are??!

jimmydefish says:
5 April 2016

Shared? -on yer bike, what business is it of anyone elses who I get my sustainably produced energy from? I reccomend them to anyone readind this though, It could be Ecotricity or it could be Good Energy. Let’s face it we’ve fgot to stop screwing about with fossil fuels and thinki of the lives of future generations, We stood up to a common enemy in the 1940s Why the heck don’t we stand up against this global problem now!

Some people will never switch most can not be bothered too and some do not care how much they pay because they have more money than sense Many do not take notice of any advice at all

Eamon says:
5 April 2016

I hate to say this but how dare you assume that I or anyone else would auto switch too another supplier, it’s arrogant & offensive….

I’m not sure what you regard as offensive?

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I don’t think it is clear to whom Eamon is addressing his comment. I interpret it as a reaction to the CMA’s proposal and not a response to any individual commenter.

A lot of people have made a conscious choice to be on a standard variable tariff and would resent an outside body listing them for mail-shooting.

While the government charges VAT on fuel, I see a conflict of interest, where :-
Why would the government want us to pay less for our energy while there VAT income would be reduced.
VAT on all home energy bills should be scrapped.
The government should stop energy companies mass profiteering from customers, Fine them if they make over a certain amount of profit in a year! (they would probably get more than there current tax amounts)
Unit rates and daily meter charges for electric and gas should be showed on tarriffs in nice big print so everybody can compare tarriffs easily if they want to switch companies.

European law prevents any state from charging less than 5% vat on energy. This is out of our Government’s hands (for now) and to give them credit they only charge the minimum (some EU states charge 20%).

We spend much more on food, travel (for many) and housing for example than on energy so if you choose to cap profits on essential services then quite a few industries would be affected. It is not likely where there is competition.

I do agree that unit rates and the standing charge (if there is one) should appear prominently on each bill. I find the Tariff Comparison Rate (TCR) no substitute for knowing the actual rates. I believe it was introduced in the belief most of use are totally innumerate. It would also be useful to keep a rolling 12 month total spend so you can see just how much you are likely to need for your future bills.

We pay 5% VAT on energy [the lowest VAT level permitted by European regulations] but if we spend less on energy we will have more money to spend on other goods and services that attract a 20% VAT rate so the government is not unwise to curb our energy consumption on revenue grounds alone disregarding the overriding environmental arguments.

As it happens, energy companies are not making massive profits on energy supply by commerce and industry standards. The government gets two bites of the cherry – it taxes energy consumers [and imposes levies on them] and taxes the profits of the energy producers and suppliers.

On customer information you might like to look at this Conversation “SSE: how we’re making energy bills clearer” [26/02/2016].

Quite, John. What worries me though is the view that when we spend less on one thing we should then spend it on something else. Why not simply save it? Ah, interest rates are too low. So what? Money saved is still there (maybe depreciating a little), or try a stocks and shares ISA, useful for a rainy day, an emergency, towards retirement, whatever. We should, I think, get out of the culture of simply spending all our available (and borrowed) funds. 🙁 [Mr Grumpy].

Well I would advocate saving it [for the colder days as well as for the rainy ones], but all savings get spent in the end so the government eventually gets some VAT on every penny in our piggy banks. And there’s nothing wrong with low interest rates if inflation is even lower. Contrary to conventional wisdom I believe a certain amount of money sitting in a current account earning no interest has an availability value in these times. For many, however, it burns a hole and has to be spent.

Instead of many many many many many many many many mmany many many many many many many many many many many many many many mmany many many many many many many many many many many many many many mmany many many many many many many SO CALLED SUPPLIERS AND RATES.
WE ONLY NEED 1 (ONE) DOMESTIC TARRIF – – – – – – THE CHEAPEST
If another company can offer THE SAME GAS & ELECTRICITY ALONG THE SAME SUPPLY ROUTE CHEAPER and make a profit from their supplier – – – – – – WHO STILL MAKES A PROFIT.
WHY CAN’T THE MAIN SUPPLIER GIVE US A MUCH CHEAPER SUPPLY OF GAS and / or ELECTRICITY
Perhaps a GOOD DISCOUNT FOR LOYAL CUSTOMER the more years you are with them the bigger the discount.
Thus less chance of all this swapping and changing suppliers who have to be paid out of you profits or penalty’s imposed on customers
Any marketing material and / or letters I receive get either recycled or returned to sender.
Sales people who knock on my door especially in the evening will be sent away, telephone sales get same treatment
This is unbelievable that EVERY energy company that knocks on your door can save you money…….Ha Ha Ha
I changed to Sainsbury’s who are actually British Gas under a different guise (You are still billed by British gas if using Sainsbury’s), it took several months for them to sort out the changeover after which I had lost the benefit of the time scale for these reduced tariffs, so my services were actually dearer.
Please explain why British Gas could not just LOWER MY TARRIFS, instead of allowing Sainsbury’s and British Gas to BOTH MAKE A PROFIT.
Anything to do with the government is usually a lie whatever the title is – NO FAITH WHAT SOEVER IN ANYTHING BEING DONE TO A DECENT STANDARD OR SO CALLED CUSTOMER SERVICE VIA A CALL CENTRE WITH SOMEONE READING FROM A SCRIPT

Unsolicied post, unsolicited phone calls, unsolicited text messages, unsolicited emails.
This is just what we need – even more junk sent to us!
I am quite capable of checking whether my deal is competively priced and changing if it is not without the need for still more forests to be chopped down!

The only way for fair energy prices is to re-instate the powers of the watchdog, they used to be able to make the various companies to restrict their price rises and in some cases set the level of increase, I am positive that if they had the powers today they would cut the cost of energy by about 33% ish.

Make it as easy to understand as buying a loaf of bread is, then let people decide, the solution really is that simple.

I get the impression the fact that this has not been done is to keep people in jobs.

James Spence says:
6 April 2016

I already have to do too much weeding of the back of the doorstep. I don’t want to change my energy supplier again unless energy is re-nationalised. That would be proper progress. Anything else is a waste of my time, and fighting over crumbs.

Have you lost your minds??? more letters from all these company’s to confuse the public more. More idiots calling at all hours with more lies to try and get the public to change there minds. Absolutely NOT. These energy company’s are all crooks. They are constantly trying to find more way’s of stealing the public’s money and the government do nothing about it. Why would the government do something about the high prices when they have there money invested in these energy company’s. Whose bright idea was it to give them our contact numbers or addresses to bombard us day and night with there scams and calls. I don’t want anyone calling me or sending me more rubbish through my door. The fox never looses it’s ways. Wake up WHICH!!!