Ofgem rolls out ban on complex energy tariffs and demands more personalised communications from suppliers
Energy regulator Ofgem has started rolling out is ban of complex energy tariffs from today, as it looks to encourage consumers to switch their providers more frequently, and claiming they can save more than £200 a year in doing so.
The rollout stems from the Retail Market Review (RMR) which Ofgem published this summer, in which it sought to crack down on unnecessary complexity in the energy market regarding tariffs.
The reforms mean that once a consumer has decided how they want to pay for energy they will have just four tariffs to choose from for gas and four for electricity, from each supplier.
Meanwhile from April it will launch further reforms which will demand that providers issue their customers with more clear information and personalised messages. For example, suppliers will have to tell consumers regularly in writing which of their tariffs is cheapest for them on bills, annual statements and other communications.
The regulator is also requiring suppliers to provide personalised cost projections for the following 12 months based on the customer’s actual, historic consumption.
Ofgem CEO Andrew Wright said the regulator “will not hesitate” to take action if it sees evidence of non-compliance with the new regulations.
“It is getting easier for consumers to get a better energy deal and by April further help will arrive in the form of much clearer and personalised information.
“The aim of our simpler, clearer, fairer reforms is to ensure competition bears down hard on prices. Profits are not an entitlement, they should be earned by companies competing keenly to offer consumers the lowest prices and the best service.
“Now it is up to suppliers to build on our reforms to restore consumer confidence in the energy market. There are good signs that they are taking up this challenge.”
The Drum understands the regulator is still in the process of reviewing certain areas of its Retail Market Review, following an appeal from the affiliate industry over the ban of cashback models.
Although the ban on cashback models was aimed at the wider issue of cracking down on the over complex tariffs being used in the market, affiliate publishers have inadvertently been caught in the crossfire.
After receiving an initial verbal dismissal from Ofgem after an appeal, the regulator went on to issue a revision of the regulations, stating it would investigate the matter further to ensure third parties are not penalised as a result of the changes. Cashback operators such as TopCashback and Online Media Group, are hopeful the changes will be positive for the affiliate market.