Are cancellation charges legal?

SwanJon

Miss_Moppet wrote: »

I asked the question because I wanted to know the answer. I thought that was how this forum worked.

Fine, not a problem. I answered, then you told me you didn't agree with me. If you didn't want an answer you didn't agree with, why ask?

Miss_Moppet wrote: »

I can’t see the “fundamental difference” you mention as between a single charge or multiple charges, in either case surely it’s a question of whether the charge is genuinely an admin cost or a puffed up financial sting. Can you please explain where the fundamental difference is that you have in mind?

How do you think suppliers are able to offer fixed or reduced rate tariffs? Much of this will come from contracts they have with their suppliers, for example, agreeing to buy 2 years of gas at a certain rate. When you cancel your contract with your supplier, they are still committed to the other contract, and will have to continue to pay while you dodge off.

Miss_Moppet wrote: »

How high would that charge have to be? How would you arrive at your figure?

It would have to reflect costs. In fact, if it is less than the costs involved, it is unfair on every other customer the supplier has.

Miss_Moppet wrote: »

How would you feel if they offered to recalculate your bill at standard rates if you left early? Would you consider that fair?
I assume you’re referring to an energy bill.

Well, you asked about energy bills, so...

Miss_Moppet wrote: »

If I'd paid my bill at the correct contract tariff rate, then what right would an energy company have to charge me again at another rate?

You paid your bill at the contracted rate, then broke the contract. Surely it would be fairer to act as if the contract was never in place? What right do you have to only agree to the bits of the contract you like?

Miss_Moppet

Cardew wrote: »

We are in violent agreement on all the points you make!

I’m so glad to find that someone as knowledgeable as yourself so definitely agrees with all the points I’ve made. It confirms my own belief that Swanjon’s illogical and rather heated comments (which I will address shortly) simply don’t stand up to scrutiny.

Miss_Moppet

SwanJon wrote: »

If you didn't want an answer you didn't agree with, why ask?

Actually, I wanted an answer that made sense. If you’d been able to clearly demonstrate that cancellation (penalty) charges were always legal, then I would’ve accepted that was the position, and that my initial suspicions were unjustified.

Instead, in your first reply, you categorically stated that penalty charges are legal, quoting mortgages. When I asked you to explain your logic in detail (since all you had said was “cf mortgages”) your response was to become aggressive and sarcastic.

When in my reply I asked you the following question you avoided giving an answer but as this question perhaps goes to the heart of the matter, I will ask it once again.

“How much would these penalty cancellation charges have to be before you agreed that they were unfair? £100? £300? Or do you think the energy companies should be able to charge what they like?”

Surely you can answer that, and then I would be glad to address the other points in your latest post.

Cardew

Miss_Moppet wrote: »

I’m so glad to find that someone as knowledgeable as yourself so definitely agrees with all the points I’ve made. It confirms my own belief that Swanjon’s illogical and rather heated comments (which I will address shortly) simply don’t stand up to scrutiny.

Thank you for the compliment.

I think there are 2 issues here and I wouldn't want to get dragged into the dispute you have with Swanjon.(who contributes knowledgeable, common sense posts on MSE)

The post of yours, with which I agreed, was about the reasons for exit penalties. "The problem the energy companies concerned have got themselves into - the mess that needs tidying up etc"

However I certainly see nothing illegal in exit penalties which was the point you were making - and with which Swanjon disagreed. The bank penalties saga differs from this situation because the charges were deemed excessive.

IMO most penalty exit charges are modest and could be easily justified against any accusation they were excessive.

In any case there are alternative tariffs available in every company that do not attract penalty charges - so the customer has a choice - not so with banks.

My objection to BG imposing charges for applying to leave Websaver3 early to go to Websaver4 is not that it is illegal, but a poor way to treat customers.

If you say that there are cases of domestic customers on fixed tariffs being automatically switched to other fixed tariffs(with a penalty clause) and without the customers agreement, then I am not aware of those cases.

If that does happen then I would think such a practice could be challenged.

1carminestocky

Get a room, you two...:p


Here you go, Cardew:

http://www.moneysavingexpert.com/news/utilities/2009/08/warning-for-scottish-power-energy-c

Guy Anker
News Editor
19 August 2009
MSE Utilities & Phones guides



Scottish Power is automatically moving customers on its popular fixed rate deal that ends this month onto an expensive capped tariff with high exit fees for those who want out.

A high-spending household could be £270 a year worse off by lapsing onto the new deal (see the Is Your Capped Tariff Ending? guide).

Miss_Moppet

1carminestocky wrote: »

Get a room, you two...:p

Don’t rush us; although Cardew and I may be having our first tiff soon.

Cardew wrote: »

If you say that there are cases of domestic customers on fixed tariffs being automatically switched to other fixed tariffs(with a penalty clause) and without the customers agreement, then I am not aware of those cases.

1carminestocky wrote: »

Scottish Power is automatically moving customers on its popular fixed rate deal that ends this month onto an expensive capped tariff with high exit fees for those who want out.

A high-spending household could be £270 a year worse off by lapsing onto the new deal (see the Is Your Capped Tariff Ending? guide).

Thank you very much indeed Carmine for posting the link and the quote. I suggest that Cardew and SwanJon should take a good look at the article which is the subject of your link. The trend is there for all to see. These manoeuvrings by various energy supply companies are clearly already going well beyond mere admin costs and into the realm of extortion. Can that be legal?

Cardew

Miss Moppet,

I did say I wasn't aware of the Scottish Power ploy and indeed, as I said above, I think such practices could, and should, be challenged. I cannot think it would stand up in court if challenged, and if ofgem had any teeth they would ban such practices.

Miss_Moppet

Cardew, I agree with your post and I sincerely hope that someone from Ofgem has the good sense to read threads like this and then take appropriate measures to protect consumers. On the other hand, I feel I’m more likely to find fairies at the bottom of my garden than Ofgem coming up with a proper code of practice.

That’s why I think that sooner or later someone has to challenge these despicable penalty charges in a court, especially in rolling fixed term contracts as mentioned in the press article which Carmine has provided a link to in post 16 above.