Watchdog probe latest sign some of the market's energy is mis-spent

Published on Wednesday 1 September 2010 22:31

The experience of working in the complaints department of a regional energy supplier when the market was opened up to competition in the Nineties left me with a healthy disregard for the sales tactics employed by the UK's big gas and electricity firms.

It was only in the late Nineties that the energy market was deregulated to allow households to use gas and electricity companies other than their incumbent supplier. The opening up of first the gas and then the electricity market in 1997 and 1998 sparked a feeding frenzy, as new suppliers battled to secure custom

It wasn't a very graceful or sophisticated battle - the principle tactic was to door-step people and confuse or pressurise them into signing contracts that, as far as I could tell from my end of a red-hot complaints line, few people understood. It's hardly surprising - elderly customers in particular, but not exclusively, were baffled by the idea that they'd be getting the same gas and electricity, only receiving their bills from a different company. Electricity companies selling gas contracts and gas firms selling electricity added to the bewilderment.

As you can imagine, the sales tactics we heard about in the rapidly expanding complaints centre were often shocking. We kept a book of them for a while, purely for light relief, but keeping it up-to-date became impossible.

Fast-forward more than a decade, and energy regulator Ofgem has revealed that it is to investigate four suppliers - npower, Scottish Power, Scottish & Southern Energy and EDF - over claims that they have breached new mis-selling guidelines. The guidelines included a requirement for suppliers to give customers written estimates before concluding direct sales. They were introduced this year following a 2008 investigation that uncovered widespread sales problems. For instance, while more than one in two people who switched supplier did so after contact with a salesperson, nearly half of those switching ended up paying more.

For Ofgem to have launched an investigation so soon after introducing the new guidelines - and for it to single out four companies - speaks volumes. It may well find those suppliers have not broken any rules, but the investigation proves once more that the energy companies should have to sign up to more comprehensive guidelines that provide greater protection for consumers.

For instance, Joe Malinowski of Theenergyshop.com has called for a code of conduct that requires salespeople to provide switchers with 100 per cent unbiased and comprehensive comparisons. A bigger issue is that the cheapest energy deals are direct debit tariffs that are available only on the internet, meaning they can't be sold on the doorstep. Ensuring households are made aware of this when contacted by a direct salesperson has to be part of any future sales rules.One of the ideas behind the opening up of competition in the energy market was to give consumers a better deal and drive up the service standards. But, for myriad reasons that would doubtless imply that the big suppliers are effectively operating an energy cabal, this hasn't happened to the extent that it should have.

It has been very clear for years that more has to be done to protect consumers from exploitative and unscrupulous sales practices.