Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 60 - 79)



  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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