Bill payers face £240m penalty as energy suppliers fail to deliver faster switching

Customers who swapped energy supplier paid £240m over the odds for their gas and electricity this year because energy companies take so long to process switches.

Despite Ofgem and suppliers committing to a maximum switching time of three days by the end of 2014 and next day switching by the end of 2018, the average time to change energy supplier is still 17 days, nearly five times the target, according to research from energy switching service Flipper.

Over half of bill payers who switch are on expensive standard variable tariffs, which can cost up to £400 more than cheaper fixed deals.

Due to the glacial pace of switching in the UK, customers this year lost £240m while waiting to move to their new supplier.

The UK was one of the first countries to deregulate its energy market, opening electricity and gas supply to competition by 1999. Despite a pioneering start, it has fallen behind other industries. In 2013, the UK banking industry introduced guaranteed seven day bank account switching. Despite being much more complicated, this took two years yet Ofgem and the industry are now saying next day switching will be delayed until 2019.

Today, the worst culprits can take up to 56 days to process a switch.

According to Flipper, the culprits are inconsistent data and unreliable processes, which plague the UK energy industry. Incorrect meter information, incompatible meters, and arguments over outstanding debt all slam the brakes on the switching process.

Today Flipper called on the energy companies to get their act together, collaborate to fix the industry data, and meet their commitment to make switching faster and hassle free.

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Stephen Smith, Director, Competition and Regulatory Strategy, Lloyds Banking Group