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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

Th e National Grid are planning to spend Millions of pounds to import electricity from France. This involves cables under sea and across land when it comes ashore in Hampshire. The plan to build a converter building 22 metres high with a footprint of four football pitches in what used to be a beautiful part of Hampshire will be a noisy eyesore . They will be paying millions of pounds to the Borough in which the converter will be sited which incidentally will be in a position to approve or disapprove the National Grid planning application. Guess what they will do. There have already been many objections raised from worried local people. But my guess is that with millions of pounds available to a cash strapped local authority, objections will be disregarded.
I wonder what will happen if the EU Out campaigners win the referendum and Britain leaves the EU. What effect will that have over the price that The National Grid will be paying it’s French supplier.

So long as there is a long-term supply agreement I cannot see how our membership of the EU or otherwise would affect the issue; the price would either be set by a formula in the supply agreement or be the wholesale market price for electricity adjusted for volume and demand.

If the local planning authority refuses permission I would expect the Secretary of State to call-in the application for determination as a national infrastructure project.

This is terrible! I wish we had a proper TV news look at the regions so we could know about anti-social proposals everywhere in the UK. Unfortunately regional news only appears in that region! Have area campaigners got a petition on 38 degrees ?

In London we ordinary people are having our share of horrors, but people outside don’t know about Thames Water’s (French or German, I can’t keep up) monopoly and how we are having to pay for a vast project … and so on.
The whole set up is ridiculous, as the energy suppliers are only the middle-men who buy wholesale from the National Grid – they don’t actually do anything except create paperwork,
and even less because of their call operatives on Customer Services. How the absentee bosses must laugh as they raise their glasses to UK.

*On another topic: I won’t do direct debits as this is an opportunity for utilities to help themselves to bank accounts; the consumer has to argue afterwards if there are any disputes.

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Or go to BBC NEWS and click on England followed be Regions and you have some choices. . .
I occasionaly use that service but I dont often have any errands there so what happens on a local level is of little interest to me
Similar can be done with Scotland and I use this daily as I have interests there
Wales again gets you local choices and both Wales and Scotland are available in Welsh and Gaelic. . .
I actually would rather read the news as listen to it or watch it on TV as much of it does not interest me. . . .Football to name but one item. . . .Overpaid dudes who cant be bothered to go to the loo at the races is all I remember about football of recent. . . Oh, ,forgot about the FIFA swindling which it now seems may be tied to the Panama, ,off shore things. . As far as the game or results are concerned, , no I could not care less
I find I can digest things better by reading at my own pace. .
Near everyone gets to know about their local problems. . .Jane makes mention of Thames Water like we should all know about that but we cannot know about everything
Does anyone on here want to now more about our up and coming elections here where we have little to no choice about who to vote for , , ,not even a protest choice as in I’m fed up to the teeth with both lots of liars

Zoe says:
8 April 2016

I was part of a collective/switch scheme. The results were too narrow (and usually ‘big 6’) and I never switched with them. Once I knew more about nuclear and Hinkley C I decided I wanted to switch my electricity from EDF and support greener products. I found one and it costs me just pence more than my big 6 did. I’m happy with them and I DO NOT want to be hassled by energy companies touting for business and would ask to opt OUT of mailings

MichaelL says:
8 April 2016

My reply to this survey was that the Competition & Markets Authority (CMA), should be the organisation to set up, and keep up-to-date data, on the cheapest 5 suppliers who were also the top most attentive to customers needs and problems; and that the CMA should then send out the latest list every 6 months.
That way consumers would only get 2 pamphlets per year instead of hundreds!

Marketing letters certainly wouldn’t make me switch supplier. I have switched for the past 3 years. I daresay I shall continue to switch annually. I have saved money every year. The service I have received from (in chronological order) Co-op, Ovo and First Utility has been appalling. But the bills get slightly smaller every year. What one doesn’t give them from one’s bank account they take out of one’s hide in wear and tear … I certainly would never trust an energy company. And a letter from one or many touting for my custom would go straight in the bin. Usually that includes the company I am currently with. Oh to find an honest merchant in this nest of energy-supplying vipers.

Malcolm says:
9 April 2016

The CMA is clearly determined to be as ineffective as possible in achieving fairer energy prices for the customers paying vile and offensive loyal customer premium prices – the penalty citizens pay for not switching fuel supplier more frequently.
Junk mail is no solution – just spitting in the face of those already abused by their existing energy supplier.
This is just more Alice in Wonderland Mad Hatter’s Tea Party nonsense from people who clearly don’t care about fairness or decency for citizens.
Who wasted all this tax money in devising this pathetic junk mail scheme? Can you please pay it back from your own pocket?

brian says:
10 April 2016

The energy companies are RIPPING us off on a daily basis while the SO CALLED regulator stands by and does NOTHING at all.

Robin says:
10 April 2016

There is way too much information about me out on the web already. I want less not more databases especially marketing databases. I want some control over what goes on the web and that is mainly just any blogging I want to do. I use Good Energy not because of price but because they are 100% renewable and they pay me more for the energy I produce than the energy I use. So higher prices from them is for me a good thing.

I know I am on police records and probably CIA and FBI records just because I have driven a car in England and have among my many friends some Muslim friends. Anything beyond those security needs that check I am not becoming a terrorist is to my mind too muchinformation,

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I should imagine the very possibility of people being put on a database of energy customers on a standard variable tariff for three years or more and receiving dozens of letters from other companies will be enough to drive people to switch to a more favourable tariff and the proposal will have achieved its intended effect without any effort. Why can’t there just be one letter from Ofgem setting out a list of alternative suppliers with contact details? Those who want to switch will do so, the rest couldn’t say they didn’t know.

It will be interesting to see what the promised privacy and security measures would be like if Ofgem gets round to implementing the CMA’s recommendation.

I suppose it will soon be simpler and a lot cheaper for the US and other governments to keep a list of people who are NOT under their watchful eye for something or other and their sophisticated resources could then be redeployed to more useful purposes. The East German Stasi had the right idea – cut out all the high-tech monitoring, get the neighbours to report on everybody, and write it all down on a card index with a linked file.

If I want to buy something, I will do my own research when I am ready.
I abhor the massive waste of unsolicited paper (goes straight into the recycling bin) at all levels in this country.
Inside newspapers and magazines, through my letter box as blatant advertising material (oh for the NO JUNK MAIL PLEASE stickers as used in Australia) and even in envelopes personally addressed to me. Please someone, STOP it!

Well said Lindad49 – Half of our recycling bin contents every fortnight has come through the letter box and is mostly discarded without reading.

I can assure you that “No Junk Mail” notices have no effect whatsoever. These are commercially available or you can make your own but door-to-door delivery people are instructed to ignore them. You can request the Royal Mail not to deliver unaddressed material but anything with your name and address on it will get through. A lot of our waste paper comes out of subscription magazines unfortunately. It’s the price we pay for having them delivered, ahead of publication and at a lower price than bought in the shops. I notice that many supermarkets have a waste bin alongside the magazine racks so you can tip all the flyers straight in the bin and assist them to achieve their recycling targets! Bringing this roughly back on topic, just think of the dreadful waste of energy in producing all this unwanted material.

People who want to switch have enough information available to make a choice. They don’t need to be bombarded by marketing communications from rivalling providers. Deliver fair energy prices through regulation. Not through the selling off of our data…. once again!!!

Terri says:
13 April 2016

No thank you – there is enough rubbish coming through my letterbox .
If I want to change providers I will get my own information .

Each energy supplier tries to make it more difficult to find which is the best deal. Try to get some reasonable response from Npower if they have over charged.

Ginnie S says:
14 April 2016

No thanks. I get more than enough marketing/junk mail as it is and I’m perfectly happy with my supplier Good Energy

I can remember the days when the provision of gas and electricity was in the public domain. In short, we owned our own power, and were not in hands of profit seeking multi-national companies. In those distant days, when any problem occurred there was a real person to talk to in a real high-street store.
I am in favour of bringing back those days and re-nationalising our power supply industries. The present competitive set-up is just too confusing and full of pricing anomolies. Let’s make it simple again, and have a fair pricing policy for all.

There is little or no competition between the big energy companies. When these services were privatised we were supposed to have a competitive market. They fiddle their accounts to blur their costs and the regulator is powerless, or disinclined , to do anything about sorting them out. The Conservative government is likewise not interested in tackling the problem for fear of upsetting the big money men. The drop in oil prices has barely been felt in our energy bills. The market should be working like the vehicle fuel market where prices react much more rapidly to fluctuations in oil prices.
I would add that the water supply companies are no better than the energy companies in their attitude to consumers, and their basic product falls from the sky at no cost!

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Interpreting the diplomatic language in their report, the Charity commissioners are ticking Age UK off for marketing an inappropriate energy deal. Many people would feel that if Age UK sell energy to old people, they would have value for money as a top priority – among the cheapest available deals – as they are dealing with many vulnerable and poor customers who would trust Age UK to be acting in their best interests. But not so. The deal was far from the cheapest. They used the deal to generate funds for the charity – funds effectively taken from the very people they are supposed to be helping. So in future, give your target audience sound advice, not commercial products, seems to be the message.

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/517523/Age_UK.pdf

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I’ve been with Extra Energy for 18 months. Most of the time it is a shambles and I half suspect I have been overcharged because trying to get coherence from them is a trial. I’m seriously thinking about going back to EDF. At least Cust. Svce answers. Extra Energy rarely does.

The energy companies are out of control whilst David Cameron sits and does nothing. After being told I was on a good deal my supplier told me of a better deal but to leave was a penalty. I’ve now switched which to another company a complete fiasco taking nearly two months.
We the consumers are being slowly priced out of affordable fuel

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Glenn Ridehalgh says:
24 April 2016

Switched from N-Power last year and their projected usage!!!!! to United Utility until next month when they switch tariffs and my bill will jump from £109 a month to £187!!!!! so giving SSE a whirl, down to £ 87 a month!!! fingers crossed, Glenn .

A few years ago, through a comparison site, I moved from SSE to First Utility and achieved a price drop. After the end of the term, I was offered another deal with them and got another price drop. I am now starting another tariff at their suggestion at the end of that deal and am getting a further price drop. It’s so easy now and I fail to understand why others have not changed, when my energy cost are getting lower all the time and First Utility are a first class supplier. In each case, price comparison sites confirm that these have been my best options.
Locally, we have a new council-run, but nationwide energy supply company which is non-profit making. If other energy firms are making the vast profits as some seem to think, this new company should be the cheapest, but it is NOT! The CMA’s proposals will not, in my view result in loads of junk mail, as the companies will not wish to lose their customers and will offer better deals BEFORE they appear on a database. I would have thought that this is common sense and the dissenters have not thought it out.