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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

These proposals are quite inadequate in dealing with an energy market that at present only benefits the major suppliers (ie the Big Six) and can only demonstrate that the CMA is not fit for purpose.

You can’t trust any of them renationalise the lot and the rest of the privatised manopolys or show me a privatised monopoly where the price has come down?

It is absolutely appalling that this country has sold off the electricity utility into private hands. The CEGB built and operated our power stations but this country has now lost its ability to update our time served nuclear stations and has to ask France and China to do it for us.

Agree Alex. Not only sold into private hands, but mostly foreign ones now too. The government hate nationalisation, unless it belongs to a foreign government, then its fine by them. Take EDF for instance owned by France and going to build our nuclear station at horrendous cost and guaranteed return.

Why is there a variation in price from one company to another? it’s the same gas or electricity coming down the same pipes or wire no matter who you use the only difference is the price….Imagine going in to a super market and buying a plain labeled tin of beans and the telling the check out operator which brand you want to pay for either Aldi budget or Heinz and your charged accordingly……

Neil Sutherland says:
6 April 2016

Heinz beans are the same no matter where you buy them, but they’re not all the same price are they?

The CMA are more like an industry representative than a competition authority. They always never find anything wrong with whatever industry they investigate from power to supermarkets. Wind the thing up – its a waste of time and money, just displacement activity looking as though something is happening.

Any private business sell goods or services to maximise profits. Life requirements consumables like sanitation, water heating electrical light should be a government nationalised industry for the population. Any profits that are made in the supply should be put back in to the infrastructure.

If you bought shares in privatising nationalised companies to make a quick buck then here is the price we all now pay.

None of the U.K. energy companies are British owned, so they only care about producing profits for their foreign investors. The thing I find reasonabl about this is, that EDF (Électricité de France) is still 89% owned by the French gouvernement. So any profit they make from the British goes towards paying French pensioners, it’s juste a pity that the British gouvernement doesn’t think that their pensioners deserve such support. They just have a quango that the tax payer has to pay for, to make pointless suggestions like the current one of putting every customer on a list, to have more rubbish put through their doors juste to be binned. If the energy companies are going to remain in the hands of foreign investors, then they will never think of taking a cut in their profits voluntarily…either the CMA or gouvernement has to force them, and if that were the case you’d soon see how many foreign investors flee…

I object to being bullied in to changing and angry that new customers get better deals than loyal customers. Energy would be much cheaper if companies were not spending fortunes on advertising and on the admin related to those who do change regularly. Competition is pushing up prices.

‘NO!’ to sharing of personal data to suit the energy companies. But, ‘Yes!’ to an extra re-cycling bin to deal with all the inevitable junk-mail.

I would like simple communication from energy companies instead of £ per kilowatt for the first ….. and after that £per kilowatt and on and on all to confuse

Instead of paying foreign companies to build our generating equipment, wether it is solar panels, wind turbine. water power, or nuclear, we should be building our own with British Steel and not relying on foreign countries supplying them, as we all know you do not get owt for nowt, as they will be paid for in some form, and it usualyy means that the consumer picks up the tab, so why not let the consumer i.e. taxpayer fund them in the first place, it would pay us to do it that way in the long run, if the government woke up and smelled the coffee, and not the poo they are serving us.

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The gouvernement is aware that’s why they set up the CMA for the tax payer to waste more money on, while trying to convince the public that they really care about the price paid for energy. They should make the staff of the CMA redundant and send them to the Job Centre, and give them jobs collecting and emptying the recycle and landfill bins every week. But they would rather foreign investors make a profit, and guaranteeing that they continued to get paid so they can salt away their bribes in Panama.

Not only US steel but all their other crap food they eat that wouldn’t be allowed in Europe, the American standards on food safety are much lower than in Europe. TTIP will be gouvernement by an unelected body of American corporations, who will have the right to sue individual gouvernements who pass laws that affect their bottom line of profit. Why do you think this gouvernement is changing the education system to individual Accademys, so they can be privatised…and causing so much havoc within the NHS, because part of the deal which only benefits the Americans is to allow the American health insurance companies into the health system…and we know how well it works in America, if your healthcare runs out in mid treatment for cancer they stop paying the bill. People who work for Walmart (ASDA) get paid minimum wage, which means they can not pay healthcare insurance…they have to hope they never need a doctor. As do 49 million other Americans, who can not afford paying for healthcare. That is what this gouvernement wants over here, because the American corporations have been spending billions of dollars lobbying Westminster and the European parliament to bring this about. In the USA these same corporations are suing States who want all the ingrediants listed in food, the corporations at first said it would be to costly and then they have been saying consumers don’t need to know what’s in their food.

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Duncan, thank you, it’s not often I’m complimented on my views…

ruth says:
6 April 2016

As far as i am concerned this is another big white wash i have no faith in this government at all.

Dear responsible authority.

Please make it easier for me to figure out eager the best deal is for me and to minimise the amount of sh1te that I might be exposed to from companies that might think I am an easy touch!

Thanks

Mike.

Hope they use Royal Mail to send out the letters – I’m a postman

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Yes, is it still a whole 1p you get for each leaflet dropped through letter boxes?

How are the CMA funded?

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Aren’t they going to privatise the Forrestry Commission Duncan, so that some other Chinese or Indian consortium can make a huge profit selling or leasing parcels of land for housing and industrial use…in the name of saving the tax payer?

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david smith says:
6 April 2016

It is about time the Government made the big six fall in line like the other companies who can cut prices Also why have a watchdog that does not have any teeth to make the big six fall in line like the other companies. The price of oil as gone right down but little given back to the public and yet they still make large profits.

Who pays the CMA??

Most tariffs seem to comprise pf two elements (a) a daily fee and (b) a rate per unit (kWh) consumed. Assuming you know your typical annual consumption, you can calculate and compare rates from different suppliers. That is the ONLY way to compare. All the other attempts to “simplify” comparisons, just confuse people.
BUT confusion is REQUIRED for the system to survive. Just imagine if every petrol station in your town were in the same street. Fuel is priced per litre and a big sign outside says what the prices are. For the most part, the product is the same. Everyone would drive passed the others and go to the station offering the cheapest fuel (the only deterrent would be the length of the queue!)
In the Energy “market”, let us assume that each company just had a single rate per unit consumed. That would allow everyone to make a very simple and direct comparison. Just generate an on-line form to change and we could all change really easily. HOWEVER, that risks huge numbers migrating to the company with the lowest rate. Great you say. Err no. That company would not be able to supply the volume and the rest would soon go bust!!!
Anyway the plan is to add much more confusion. “Smart meters” will allow the rate you pay to vary depending on demand. So you will have numerous, or even a continually varying rate per unit consumed. Go compare Energy prices in that scenario !

I feel that the energy company do not care about their customers they are only interested in how much money they are making.

From the D Telegraph October last year:

” But James Higgins, an energy policy expert at Ecuity, the consulting firm, said the Government should “stop fixating” on customer switching and focus on the high wholesale cost of energy.

“The best way to reduce bills is to find ways for people to use less energy in the first place. By encouraging the least possible energy consumption, this can drive costs down by reducing demand and changing the basic fundamental input costs for suppliers.”

And the more who people switch energy suppliers, the greater the cost of household bills, according to Prof Thomas. “We have the highest switching rates in Europe and clearly this hasn’t driven down bills.

“There is a huge administrative cost to suppliers when a customer switches. If it goes smoothly, this might be a few pounds, but in cases where a switch goes wrong this can run into thousands of pounds.”

A spokesman for Ofgem said: “Historically UK electricity prices have been just above average, but our gas prices are amongst the lowest in Europe.
“Any remedy to address the issue will be for Decc to develop, which is responsible for energy policies to determine how we source and generate electricity.”

So apparently there you have it. Switching IS a cost to suppliers both losing and gaining AND that price is paid by thee and me. Reducing demand could reduce the need for more capacity. As mentioned before in the many Conversations here on power [its such an emotive page filling stuff for the media] the French are allowed to put the capital cost of frugal power sources such as air-heat pumps against their taxes.

That would of course reduce demand for houses that currently use electricity for heating. The again the Govt could bite the bullet and if they cannot stomach a full Severn Barrage then many tidal lagoons would provide greener power than this Franco/chinese nuclear power station ……

Face it the various Govts Blairits and other Conservatives have abdicated from long- term planning for crucial utilities and industries in the astonishingly naive belief that profit driven companies have any long term planning interests.

So we have both company Directors and office seeking politicians at most working on five year cycles of profit and popularity. Part of the problem has been the politicising of the Civil Service. Before that civil servants used to be in position long enough to think strategically. Now it is all Spads* and lobbyists.

*SPecial ADvisers to the Ministers paid for by taxpayers and all working to become MP’s or lobbyists on their own account.

Originally I thought the CMA proposals had some merit; having thought it over I have changed my mind. Nobody should be encouraging cold-calling, nuisance phone calls and junk-mail, which is likely to be the outcome when the energy companies outsource this marketing opportunity.
The public should be rid of the plethora of multifarious tariffs which can have no purpose other than to cause confusion and result in mind-numbing research to find the best deal.
In all honesty I’m not that fussed about customer service from utilities companies as long as water comes from my taps, my power stays on and my heating works. The top line for me is cost. I want to forget all about whether it’s night or day or standing charge/no standing charge; I just want to know the up-front all-in cost of a kilowatt hour of energy.
As it happens, I have just changed to npower dual fuel via a Daily Mail promotion, having been with Scottish Power for several years where some aspects of customer service are the pits. I should save about £200 per year. I’ll shop around again at the end of the deal.
I know several people who have been with the same energy company for years and on the standard tariff. They usually say they think energy prices are ‘alright’, even though they don’t know what they are paying per kWh; or they are uncomfortable or can’t be bothered with internet research. Some think all energy companies are the same, so what’s the point in changing. Life’s too short.
I guess all this is a form of inertia, which the energy companies rely on. I believe that if it wasn’t for the likes of Which? and the media, which tries to hold the companies to account, they would sail serenely on, blithely ignoring their turbulent wake.