CMA investigation into energy market

by Communications Team | Jul 07, 2015

The Competition and Markets Authority (CMA) has today published its provisional findings after a year-long investigation into the energy market.

The findings highlight a range of problems hindering competition in the market, including the extent to which consumers are engaged in the market and shortcomings in regulation and the ability to deliver change across the market. Amongst other things, it concludes that there are several problems preventing effective competition between the ‘big six’, which in turn is causing consumer detriment. The investigation’s Chairman commented that “energy suppliers know they don’t have to work hard to keep these customers. It’s notable that there are such high levels of complaints about customer service.” It has also found that:

  • Consumer disengagement with the market is impeding proper functioning of it. The CMA points to a survey of over 7,000 people which suggests that more than a third of people have never considered switching
  • Consumers lack awareness of better deals in the market, and are deterred from switching due to ‘real and perceived difficulties’ of switching supplier

Responding to the report, Lewis Shand Smith, Chief Ombudsman, Ombudsman Services says:

“With an increased number of tariffs and more choice for consumers, there needs to be transparency around these tariffs and what they actually mean for customers.

“With 86 per cent of energy complaints we received last year related to billing, it is imperative that consumers are able to understand their bill easily. We would like to see energy companies find new ways to explain their tariffs and compare them like for like with different energy companies – so that consumers can easily compare tariffs and be able to see where savings can be made.

“After billing, the next biggest grievance is with transfers (11% of complaints last year), so it’s also crucial that if switching is encouraged, that energy companies do more to make this an easy process for customers.”