Watchdog to allow suppliers to contact rivals’ small business customers, end contract penalties


money-trolleyThe competition watchdog will allow small business energy suppliers to contact rival firms’ customers in a bid to make them switch to cheaper tariffs. It also plans to ban exit penalties on rollover contracts and make suppliers show small businesses all of their available contract prices so that they can easily see the best prices for their outfit.

The Competition & Markets Authority issued those recommendations for microbusiness energy customers today following a long-running investigation into the market.

In addition to expediting the move to half hourly settlement, the watchdog wants suppliers to disclose details of their most disengaged customers to rival suppliers, who will then be allowed to contact those businesses and offer them a better deal. The aim is to put an end to profiteering by suppliers, which the CMA thinks is overcharging hundreds of thousands of small UK businesses.

While the watchdog revised down its earlier estimate of a £500m racket to £230m, it believes its proposals would see “a material reduction” on the prices paid by the UK’s smallest businesses for gas and electricity.

The CMA also wants to curb exploitation of auto-rollover contracts by giving businesses a longer time window to give suppliers notice of contract termination and by banning both termination fees and use of no-exit clauses.

It also proposes prohibiting termination fees for evergreen and out-of-contract (OOC) deals. Those remedies would effectively mean suppliers cannot charge termination fees on default contracts for microbusiness customers, thereby reducing the barriers to switching for microbusiness customers on evergreen and OOC contracts.

See the full summary of the CMAs findings here.

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