Is there a limit to amount of times switch supplier in one year?

Cardew

Plushchris wrote: »

I thought you were on a fixed deal with BG cardew?

So how can our switching be affecting your prices?

Yes I am on a fixed deal and clearly it doesn't affect me - at the moment - but the principle of it being a crazy system still applies, and eventually my fixed price deal will end!

You and I, don't confine our posts on this forum to matters that only affect our personal situation.

Quentin

Seems to me that if fixed deals were abolished those of us not on fixed deals might be paying a lot less for our energy whilst we are tarting around picking up our cashback!

The rest of us have to pay for your tariff being fixed!

Cardew

Quentin wrote: »

Seems to me that if fixed deals were abolished those of us not on fixed deals might be paying a lot less for our energy whilst we are tarting around picking up our cashback!

The rest of us have to pay for your tariff being fixed!

Absolutely true! and BG have 2.4 million customers on fixed price tariffs.

Your point being?

I get the impression that this thread has got heated because those churning feel they need to defend their position! even though there has been no criticism - actual or implied - of their actions.

Plushchris

I just dont agree with the term "Parasitic" as justified in the description of these services.

To give you an example, Energyhelpline actually started from switchandgive.com the same service but instead of giving the customer cashback they make a donation to charity. Hardly a "parasitic" action is it?

Also in Martins article on switching he writes "Comparison services are paid between £30 and £60 per switch from the energy companies; in other words they're referral businesses. In itself this isn't actually a problem, as it doesn't add costs to the consumer, plus consumer group Energywatch has an accreditation system for website, not phone, services, setting minimum standards."

Cardew

Plushchris wrote: »

I just dont agree with the term "Parasitic" as justified in the description of these services.

To give you an example, Energyhelpline actually started from switchandgive.com the same service but instead of giving the customer cashback they make a donation to charity. Hardly a "parasitic" action is it?

Also in Martins article on switching he writes "Comparison services are paid between £30 and £60 per switch from the energy companies; in other words they're referral businesses. In itself this isn't actually a problem, as it doesn't add costs to the consumer, plus consumer group Energywatch has an accreditation system for website, not phone, services, setting minimum standards."

Plushchris,

I really cannot see the logic of those statements.

I can't recall how many million customers changed supplier last year(it was given as evidence in the Parlimentary Committee) and of course not all of them changed through Quidco/comparison networks. They stated 20% of those switching moved to a more expensive tariff. (I accept it is unknown how many of those were through Quidco/Comparison networks.)

However the commission paid out by the Utility companies must be measured in many £millions.

How can that not be reflected in the costs to the companies?

It doesn't matter where that commission goes - the individual, USwitch etc, or a charity - it is still a cost to the company paying that commission.

I can't speak for Martin. However my interpretation of the quote you gave is that it doesn't add costs directly to the consumer. i.e. they don't contribute to the comparison website or the company for using the switching site.

However it very clearly adds costs to the companies(how can it not?) and so indirectly must add costs to the consumer. It is simply like any other overhead - employed staff, office accomodation, telephone etc

The only difference IMO is the high levels of commission are largely an unnecessary overhead and mean extra staff are employed.

I wonder why you raise Martin's comments in this thread. He is totally upfront in his article "how this site is funded" about getting commission for referrals(click through) to various comparison websites - he obviously has to fund this site. Thus he understandably cannot be expected to be critical of a system that contributes to running this site.

So can you elaborate and explain how commission paid out by the companies does not add costs to the consumer?

Gavioli_UK

As I understand it there are more costs associated with changing supplier than cashbacks.

When I left the industry in 2002 the costs associated with "winning" a customer was qoted as £380, and the customer had to be retained for several years to recover this. This included actual costs payable for changing MPAN records (I recall £80 per transaction).

The cashback industry (in general not just the energy market) was discussed on Radio 4 yesterday when it was predicted to grow rapidly especially as Microsoft was setting up a site in America. It was pointed out that "cashback" costs appear as advertising in a companies accounts. Presumably it is a cost that can be offset against tax

1carminestocky

Gavioli_UK wrote: »

As I understand it there are more costs associated with changing supplier than cashbacks.

When I left the industry in 2002 the costs associated with "winning" a customer was qoted as £380, and the customer had to be retained for several years to recover this. This included actual costs payable for changing MPAN records (I recall £80 per transaction).

The cashback industry (in general not just the energy market) was discussed on Radio 4 yesterday when it was predicted to grow rapidly especially as Microsoft was setting up a site in America. It was pointed out that "cashback" costs appear as advertising in a companies accounts. Presumably it is a cost that can be offset against tax

I made this point earlier in the discussion. Cashback would be classed as advertising for income tax purposes and so reduces the company's tax liability - in effect, it could be said that the only people losing out here are the UK Govt. I think I can sleep easy in that knowledge...

Plushchris

Cardew wrote: »

So can you elaborate and explain how commission paid out by the companies does not add costs to the consumer?

No I cant, just the same as you cant elaborate and explain how it DOES add cost to the customer.

The extra staffing issue is a rubbish excuse IMO as they would just employ more door knockers etc if they were'nt employing people to deal with switching services.

Cardew

1carminestocky wrote: »

I made this point earlier in the discussion. Cashback would be classed as advertising for income tax purposes and so reduces the company's tax liability - in effect, it could be said that the only people losing out here are the UK Govt. I think I can sleep easy in that knowledge...

Really?

So using that logic if company A spends £10million on advertising and company B spends £15 million it is the UK government that pays the extra £5million?

Advertising is an allowable expense when it comes to the assessment of profit and a company's liability for tax. So depending on their tax rate a proportion of that expense will be picked up by the Government.

However how does that benefit the consumer?
It doesn't matter if a company spends £10million or £15million on advertising that extra cost is still passed to the consumer. The reduced tax liability benefits the company not the consumer.

I think I can sleep easy in that knowledge

There really seems to be a lot of posts from people justifying churning; I really don't know why - if there is a loophole to be taken advantage of - then go for it!

Cardew

Plushchris wrote: »

No I cant, just the same as you cant elaborate and explain how it DOES add cost to the customer.

The extra staffing issue is a rubbish excuse IMO as they would just employ more door knockers etc if they were'nt employing people to deal with switching services.

Pluschris,

I can elaborate as much as you wish, that isn't difficult. What I can't do is quantify the extent of the problem.

I also totally accept that the companies might spend more on advertising and 'door -knockers' Note: 'might' not 'will'.

What is not in dispute surely is that the lure of cash, bubbly etc is a powerful incentive for people to switch and switch again.

The Comparison services also have a huge vested interest it getting people to switch as often as possible - to maximise their commission - and the interest of the consumer is not their priority.

Last Summer the Regulator gave companies permission for Lock in contracts.

This was met by howls of protest by the comparison networks who saw their lucrative commission being reduced.

http://news.bbc.co.uk/1/hi/business/6975774.stm

How noble of the comparison networks! Always thinking of the consumer!!!

I think this subject has probably been exausted.

I believe that quidco and the comparison networks add to gas and electricity costs; you don't!