Examination of Witnesses (Questions 60
- 79)
WEDNESDAY 28 FEBRUARY 2001
MR CALLUM
MCCARTHY,
MR JOHN
NEILSON AND
MR STEPHEN
REID
60. Do you feel that given the relative penetration
of web facilities in terms of rich and poor people and all the
rest of it, that this is another institutionalised bias in favour
of people who have got more money who can benefit from direct
debit, who are not being discriminated against because they have
not got prepayment or have got access to a computer? Do you think
you should do anything about that?
(Mr McCarthy) That does concern us very greatly. Many
of the people who will download, we hope, are people who are in
a position to act as multipliers of the news. I am sure that of
the 12 newspaper reports that occurred in January, many of them
downloaded the information from our website. I think that having
it there is not just for those who are rich enough or savvy enough
to have their own PC but also is of general applicability.
61. Do Ofgem offer a service where I, as a prospective
customer of a new supplier, can ask you who would be the best
supplier for me, or to energywatch? Do you supply that advice
or not, or is it just about taking complaints?
(Mr McCarthy) We always ran, until we handed it over
to energywatch, a freephone customer helpline.
62. If I was a customer and somebody came along
from Npower and said "Mr Davies, you can get very cheap electricity",
I could ring you up and find out that it was, in fact, London
or whoever it was?
(Mr McCarthy) If you had phoned until the point at
which we transferred this to energywatch.
63. Could I do that with energywatch?
(Mr McCarthy) Until that time you could have phoned
up and we would have sent you the pack which enabled you to find
the cheapest supplier of both electricity or gas or electricity
and gas combined for where you live.
64. I keep thinking that it would be a good
idea for that information to be compulsorily carried on the material
from all the competing companies that says "you can phone
this number to find out whether this is the best deal".
(Mr McCarthy) We do not favour doing that.
65. No, because they know they would not get
any sales then because they are offering false promise, is that
right?
(Mr McCarthy) Because in competitive offerings you
naturally require people to compete.
66. Let me ask you about clarity of promotion
on price differences. A lot of people have said to me that because
there is a relationship between the standing charges and unit
charges in terms of calculating what is best, etc., they do not
know whether they are coming or going and they do not know whether
they have got the best price or not and it is in the interests
of the marketing company to provide a certain amount of confusion,
particularly given your research that the first person who comes
to the door gets the sale. Is that not a bit worrying?
(Mr McCarthy) It is worrying, yes.
67. Do you think that it would be better to
tell the industry to rely more on other techniques than door to
door, whatever it is, advertising, direct mail, etc?
(Mr McCarthy) No, I do not believe that it is for
us to tell people how they should run their businesses.
68. Do you think that people should be required
to inform prospective customers before a door to door salesman
comes round in writing that somebody is going to come round because
of the growing fear of burglaries, etc., in the day, people coming
along in smart suits with a logo cut out on a bit of headed notepaper
embossed purporting to be an ID and before you know it they come
in saying "can I have a look at your gas unit" and they
have burgled the house? Do you not think in the light of that
activity that you should be requiring gas companies to pre-warn
maybe the whole road that the gas man is coming round knocking
on their door?
(Mr McCarthy) We had not thought of that particular
problem and it is not one that has been raised as a significant
problem with us.
69. Do you think it might be worth having a
look at the idea of pre-warning people about door to door salesmen?
Maybe I will ask Stephen Reid because he is nodding his head and
he is the customers' friend.
(Mr Reid) Perhaps if I may just respond to several
points, and I will do it briefly. We do think that we should be
conveying to potential consumers that there is doorstep selling
going on. We could use free press and the like. We think that
is very valuable. Secondly, we would like to see price and quality
information conveyed in a standard format that would enable easy
comparisons by individuals. Lastly, you raised the point that
when a complaint is handled by a company we may not know about
it. We would like to acquire that information and that is partly
why energywatch has been created. In addition to us acquiring
that information, we do think that the company is the right first
port of call in the event of a complaint. In the event of that
complaint not being handled satisfactorily we would want them
to come to energywatch, which is why we regard ourselves as the
consumers' friend, and actively we should promote our presence.
70. You agree with all these ideas and that
is very good but what prospect is there of them happening? Do
you have any power to do that, or Ofgem?
(Mr Reid) We believe that it is quite possible for
us to do these things because many of these things, for example
the press illustration that I have given, are things that we could
enact relatively quickly.
71. Can you make companies provide more standardised
and easily comparable information to ensure that more customers
understand what best value is?
(Mr Reid) I think that we can work with Ofgem and
the companies in joint recognition of that and that is the way
we should be going.
72. Can you encourage them to do this mailshot
before knocking on everybody's door randomly?
(Mr Reid) We may certainly want to encourage them
to do that. It may be the case that we would want to advertise
the presence of doorstep sales people in a particular community
and we can do that by our own outreach work.
73. What sanctions are there against intimidatory
doorstep selling? I know you said there are no fines allowed but
you mentioned that licence conditions can be varied. If you find
they have got teams of people going around harassing old people,
for argument's sake, what can you do about that?
(Mr McCarthy) If we believed that there was a company
whose sales force were acting that way we could take action against
that company which would impose conditions upon them to manage
that sales force more tightly.
74. And if they did not?
(Mr McCarthy) We could stop them marketing.
75. Could you stop them trading?
(Mr McCarthy) After June I hope that we will be able
to impose financial penalties.
76. After when?
(Mr McCarthy) After June or whenever the Government
brings in the necessary power.
77. After June you have got the power to fine
companies, is that correct? On marginal pricing, is it the case
that if companies get a new base of users from doorstep selling
or whatever at a certain price, do they then go on to another
set and charge them a lower price so that the marginal price they
charge for new users is less than their existing loyalists, or
is that illegal?
(Mr McCarthy) No, that is not illegal. Many companies
charge different prices in their incumbent area and where they
are competing out of area.
78. So you find this in many markets, do you?
When you are with the AA as a loyalist you find that you can get
a better price.
(Mr McCarthy) You cannot in area charge different
prices.
79. I know there was some news about California
running out of electricity because of competition and privatisation
and reduced overall production. Do you think there is a prospect
that they will run out of electricity and gas in Britain because
of the activities of the marketplace?
(Mr McCarthy) No, I think the position in California
was dramatically different.
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