Memorandum submitted by Trading Standards
Institute
The Trading Standards Institute is the professional
body for Trading Standards professionals working in the private
and public sectors.
It is the national body responsible for representing,
supporting, lobbying, and championing Trading Standards to a range
of stakeholders including government, business, consumers, and
the media.
We look to provide innovative solutions across
the regulatory arena; to administer and award professional qualifications;
to accredit and certify training and ensure the ongoing competence
of members; and to influence and lobby on behalf of the profession
as a whole.
We aim, through our actions and our members'
actions, to empower consumers and reputable business to contribute
to a vibrant economy.
We strive to eliminate rogue traders and unfair
trading practices from the marketplace; to promote environmental
sustainability; and to make an effective contribution to the health
and social wellbeing of citizens and communities.
Whether the current market structure encourages
effective competition in the retail markets for gas and electricity
1. Regarding the effectiveness of competition,
TSI believes that more onus should be put upon the energy companies
to ensure that the information they give consumers is as clear
as possible in terms of their pricing policies—it is currently
extremely difficult for the average consumer to compare `like
for like' price plans and make informed choices.
This is also very important for helping consumers
to manage their energy consumption: at present energy information
makes it difficult for customers to do this. TSI would like to
see smart meters so that consumers can easily see their energy
consumption costs as it happens.
2. Price comparison websites are complicated
and this is compounded by the fact that the price plans change
so frequently that a company which may be the cheapest one month
is unlikely to be the cheapest the following month. Trading Standards
Services have dealt with a number of consumer complaints where
this has been the key issue. It is a cause of great frustration
amongst the individuals with whom TSI Lead Officer Richard Matthews
has dealt with as a local authority Trading Standards Officer.
3. A further factor that affects competition
is the apparent difficulties which can arise when a consumer makes
the decision to move from one energy supplier to another. Trading
Standards Services across the country deal with complaints owing
to administrative mistakes which occur during the transfer of
customers between companies. It could be said that if the internal
procedures of these companies were to be tightened up then customer
confidence would be increased and customers would feel more confident
in their ability to change energy supplier more easily. At present
TSI feels that that this puts customers off switching energy suppliers
and is a barrier to customers being able to obtain the best possible
energy deal.
The effectiveness of regulatory oversight of the
energy market
4. Whilst Energywatch, the independent gas
and electricity watchdog, has responsibility for policing this
sector, it is often felt by Trading Standards professionals and
consumers alike that its powers do not go far enough. Whilst Energywatch
is able to advise consumers, if the complaint results in deadlock,
the consumer must then refer their complaint to the Energy Ombudsman.
TSI would like to see a more streamlined system
which makes it easier for consumers to complain and also get a
faster response from the energy companies, particularly where
the complainant has problems paying his or her bill.
TSI is also concerned that later on this year
when Energywatch is disbanded the regulatory regime could be weakened
and not strengthened.
Progress in reducing fuel poverty and the appropriate
policy instruments for doing so
5. In the main the policy of the energy
companies surrounding fuel poverty appears to be concerned with
energy saving techniques, such as additional insulation. Whilst
from an environmental perspective this is a commendable step,
those on the lowest incomes may struggle to implement those measures
where there may be a one-off cost involved if the grants that
are currently available stop in the future.
6. Supporting consumers in making energy
efficiency improvements is essential. Currently, subsidies and
discounts can even, in some cases, make insulation measures, for
example, free—but it should be noted that such help is variable
by area and/or supply company. However, even if there is a one-off
payment required, better-insulated buildings mean lower long-term
costs, which is even more important as energy prices rise.
It is true that problems may occur because of
lack of awareness of the efficiency savings possible from insulation
measures and subsidies and discounts available, and the perception
of high capital costs. An additional problem may be the lack of
consistency in grants and subsidies available. Energy companies
need to provide clarity in supporting their customers to find
out what is available.
7. Advice on energy efficiency measures
is essential, but should sit alongside advice to reduce actual
energy cost. eg by changing the way that bills are paid.
8. Pre-paid energy contracts are increasing
in popularity and TSI believes that it would be of value to consumers
if the energy companies gave them adequate information on the
volatility of wholesale energy prices, thus enabling them to make
informed consumer choices.
For example, energy providers may wish to use
the following wording: "the cost of energy fluctuates and
at some periods you may pay more for the energy you use".
9. Information about energy consumption
of different appliances and simple energy savings tips may be
more helpful than general statements, helping consumers to save
money and reduce emissions.
10. It tends to be the case that those customers
living on lower incomes find themselves using pre-paid energy
as the only option available to them. However, these customers
may find themselves paying up to 50% more for the energy they
use, which puts them at the greatest disadvantage.
TSI appreciates that there are circumstances
where these customers have issues obtaining credit and may not
even hold a bank account. However, we feel that something should
be done to address this issue so that the poorest members of our
communities have the ability to heat their homes sufficiently.
One action, for example, could be the more consistent use of social
tariffs by energy companies.
All suppliers should be obliged to offer energy
assistance packages to the most vulnerable groups based on minimum
standards set nationally. The tariff should be set at the lowest
rate offered by that supplier, regardless of payment method.
11. It could be said that in order to effectively
tackle fuel poverty and ease the financial burden on those in
society who are least well off, it is essential that those in
the energy sector make links with organisations tackling other
areas of poverty so that tangible benefits are delivered to the
poorest communities.
12. TSI remains concerned over the controls
on sales on the doorstep and the complaints that are still received.
This is particularly important for the more vulnerable in society.
Our research has determined that over 90% of
consumers surveyed do not wish to buy on the doorstep.
TSI feels that more could be done by the energy
retailers to expose opportunities for switching to better deals
without the pressure of purchasing such a complicated product
on the doorstep.
They could, for example, engage further with
community groups to market their services in a more comfortable
environment for the community.
28 March 2008
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