Flipper, the energy personal assistant, has calculated that customers who swap energy supplier this winter will pay £91m (£25/ household) over the odds for their gas and electricity because energy companies take so long to process switches. Flipper is calling on energy suppliers to refund customers who are currently losing out.
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. The worst culprits can take up to 56 days to process a switch.
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 winter will lose a minimum of £91m while waiting to move to their new supplier. Given that switching is 36% higher so far this year and the majority of switches happen in the winter, the cost to UK customers could be as much as £128m.
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.
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. Flipper are calling 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.
Talal Fathallah, founder of Flipper, said: “We’ve been shocked to see how long it can take energy suppliers to process switches for our customers. Flipper has a clever algorithm to identify the best deals, and a team of energy industry experts to make sure the switching process runs smoothly. We can get the job done pretty quickly, but customers battling with price comparison websites and incumbent suppliers are having an horrendous time. It’s too slow in even the simplest of cases, and if there’s any complications on your account, you can forget all about a quick switch.
If Flipper’s experts have to fight tooth and nail to make a switch go through quickly, it is little wonder so many ordinary bill payers give up half way through a switch, and never see any savings at all.
Given the history of broken promises we think that suppliers should honour the commitment they made and automatically refund customers when a switch takes longer than 17 days so that customers who switch don’t pay for their failure through higher energy prices. This will also make sure that suppliers are not rewarded for their failure to deliver faster switching.
If energy suppliers don’t do this voluntarily we think Ofgem needs to consider mandating customer refunds where suppliers take longer than 17 days to switch customers.
The energy companies have to work together quickly to deliver a faster, consistent switching process. There is absolutely no reason why switching energy supplier shouldn’t be quick and easy, as it is in banking.”
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