Paul from BBC Moneybox on cheap tariffs

uptomyeyeballs

Saw him on yesterday morning Breakfast News talking about tariffs and comparison sites. He was saying that even though some companies appear to be much cheaper when you plug your details of usage into the comparison sites, people need to beware because in general they'll be trying to tie you in, with penalties and fines if you want to leave early, negating the savings you thought you were making if you need to leave.

Cardew

Most of the penalties for leaving before a fixed date(generally around 12 months) are quite low - between £30 and £60 for dual fuel.

The problem is that many people have caught onto the scheme of switching frequently for cashback(Tarts) - a practice encouraged by the comparison websites and websites like MSE.

This cashback money is of course paid for in the end by higher prices for all us customers. Bear in mind also that it takes huge staff in the Utility accounts departments to cope with all the opening and closing of accounts; another expense bourne by us customers.

If a tariff is cheaper then it shouldn't need any 'sweetener' for people to switch so the websites can rake in even more commission.

So as long as the leaving penalties are smallish and not for an indefinite period, then I think it is an understandable tactic by the Utility companies.

1carminestocky

Cardew wrote: »

Most of the penalties for leaving before a fixed date(generally around 12 months) are quite low - between £30 and £60 for dual fuel.

The problem is that many people have caught onto the scheme of switching frequently for cashback(Tarts) - a practice encouraged by the comparison websites and websites like MSE.

This cashback money is of course paid for in the end by higher prices for all us customers. Bear in mind also that it takes huge staff in the Utility accounts departments to cope with all the opening and closing of accounts; another expense bourne by us customers.

If a tariff is cheaper then it shouldn't need any 'sweetener' for people to switch so the websites can rake in even more commission.

So as long as the leaving penalties are smallish and not for an indefinite period, then I think it is an understandable tactic by the Utility companies.

Hmmm...if penalty fees are solely to put off cashback tarts, any idea why your supplier of choice, BG, charges existing customers on its Websaver tariffs a penalty fee for moving to the new, cheaper version that seems to be introduced every 3 months or so? I mean, it's not as if these people would qualify for cashback for the switch, is it?

Cardew

1carminestocky wrote: »

Hmmm...if penalty fees are solely to put off cashback tarts, any idea why your supplier of choice, BG, charges existing customers on its Websaver tariffs a penalty fee for moving to the new, cheaper version that seems to be introduced every 3 months or so? I mean, it's not as if these people would qualify for cashback for the switch, is it?

Well I haven't stated that the penalty fees are solely to put off cashback tarts; companies want some stability and many services(not just Utility companies) offer incentives and penalties to get this stability. Phone companies, Mobile, Sky, Banks etc. Insurance companies will not refund premiums in full if you leave early.

Fair point about BG, I certainly agree there is a case for BG allowing their web saver customers to switch FOC to a later version if it is cheaper. In fact it seems that there is some discretion by managers to allow such a change.

That doesn't alter the validity of the points I made in the earlier post.

Plushchris

1carminestocky wrote: »

Hmmm...if penalty fees are solely to put off cashback tarts, any idea why your supplier of choice, BG, charges existing customers on its Websaver tariffs a penalty fee for moving to the new, cheaper version that seems to be introduced every 3 months or so? I mean, it's not as if these people would qualify for cashback for the switch, is it?

I'd rather be with a company that charges an exit fee IF you leave than a company that charges a fee all the while you are with them...

1carminestocky

Plushchris wrote: »

I'd rather be with a company that charges an exit fee IF you leave than a company that charges a fee all the while you are with them...

Oh dear, should have gone to specsavers, PC. Read my post again, matey.

uptomyeyeballs

Apparently there's new guidance rules coming out in the New Year from Ofgem, tightening up on how energy is sold. I'm not sure exactly what is in the new regulations (no doubt all will be revealed here later), but if it stops misselling then it's got to be beneficial to the consumer.

KimYeovil

uptomyeyeballs wrote: »

Apparently there's new guidance rules coming out in the New Year from Ofgem, tightening up on how energy is sold. I'm not sure exactly what is in the new regulations (no doubt all will be revealed here later), but if it stops misselling then it's got to be beneficial to the consumer.

Wrong thread ?

uptomyeyeballs

KimYeovil wrote: »

Wrong thread ?

Think you're right, not sure how that ended up there. As the thread starter, I shall scold myself and demand that I don't reply to my own thread on the wrong thread.

Plushchris

1carminestocky wrote: »

Oh dear, should have gone to specsavers, PC. Read my post again, matey.

Re read it and still stand by my statement, I would much rather be with a supplier that charges an exit fee IF you leave (like BG) than a company that charge you just for being a "member" (like UW)

Ypaymore

uptomyeyeballs wrote: »

Apparently there's new guidance rules coming out in the New Year from Ofgem, tightening up on how energy is sold. I'm not sure exactly what is in the new regulations (no doubt all will be revealed here later), but if it stops misselling then it's got to be beneficial to the consumer.

See: http://www.ofgem.gov.uk/MEDIA/FACTSHEETS/Documents1/probefs.pdf