WHEN the grumbles coming from energy suppliers are so muted as to be inaudible, you know there’s trouble in store for the rest of us.
The proposals put forward by the government in a bid to boost competition in the energy market typify the ineptitude we’ve come to expect from this administration. By pledging to find a way of keeping costs down for households, the government has somehow produced something likely to have the reverse effect.
If you were wondering whether the proposals are good news for consumers, you only need to listen to the response from the energy lobby, led by Angela Knight. Yes, Angela Knight – previously the public face of the banking industry.
If she had objections to the government’s energy plans, you would have heard about them.
Instead, representing suppliers in her role as chief executive of Energy UK, Knight simply noted that David Cameron’s energy revolution will make it harder for consumers to get cheaper deals. And she’s right. To recap, from 2014 suppliers will have to offer no more than four main tariffs, which must include fixed and variable rates.
They will be forced to offer customers the lowest one in each case. It seems almost unnecessary to point out that if you’ve only got one fixed-rate tariff – it’s the highest and the lowest.
No wonder suppliers have been strangely subdued in their response. The flaws are so glaring that it’s almost embarrassing.
There may be more simplicity, but we’ll also have higher tariffs and less incentive to shop around. To cap it all, the changes don’t come into force until 2014.
Having got the ball rolling, the government will sit back thinking the issue has been sorted. If it had left it to Ofgem we would have had far better measures in place far sooner.
Could Cameron have got this any more wrong? He is playing politics with energy prices and his failure will see even more people freezing in their homes as they can’t afford the heating.
The other outcome will be happier energy suppliers, let off the hook by the continued refusal to tackle the real issue while being given carte blanche to shift customers on to a handful of expensive tariffs.
Why aren’t suppliers being forced to explain why, when they pay different rates for their wholesale supply, they move their household prices at the same time and by broadly the same amounts?
Why aren’t they forced to set out exactly how they calculate domestic energy prices? Why isn’t more being done to help small suppliers such as First Utility and Ovo compete on a level playing field with the big six?
The energy market failure is one primarily of competition, and that still has not been addressed. Reducing choice won’t boost competition. Nor will nationalising the industry, but that may well be the better option.
New rules banning commission on the sale of investments come into force at the end of the year.
They are part of the quaintly named “retail distribution review” (RDR), which also includes higher qualification requirements for advisers and new advice classifications.
The rules are hugely controversial and consensus rare. But there is widespread agreement that the RDR will restrict access to advice. Most advisers have switched to fee-based charging and are moving upmarket. Many will no longer offer advice to people with savings and investments worth less than £100,000.
Deloitte claims more than 5.5 million people will either cease using financial advisers or not have access to them.
Yet the regulator pushing through the changes, the Financial Services Authority (FSA), claims almost two thirds of advisers will still work with clients who have savings and investments worth as little as £20,000.
The reality is fewer people will be getting independent financial advice, either as advisers will refuse to serve them or because they won’t pay fees (with many wrongly equating commission with free advice). The original fear was that those people would be driven into the arms of the mis-selling-banks.
But even they have backed away from offering investment advice to ordinary customers. So the outcome will be more people taking a DIY approach.
New figures from Action Fraud underline exactly why that’s so dangerous. Some £1.2 billion has been swindled from individuals who consider themselves sophisticated investors.
Most investment fraudsters prey on those who have bought funds and shares previously and their success rate is high. For them, the RDR could be a belated and very generous Christmas gift.