Switching Supplier Made Easier For People In Debt To Existing Supplier.

Ypaymore

"Customers who are struggling with their energy bills will find it easier to switch suppliers under new rules announced today.
British Gas, EDF, Eon, SSE, Scottish Power and npower will allow their customers on prepayment meters to switch if they have debts of up to £500 - an increase from the current £200 limit.
It is one of a number of changes planned by the industry regulator Ofgem to encourage suppliers to work more effectively with households to resolve debt issues and use disconnection as a last resort.
There are some 320,000 gas and 315,000 electricity customers with prepayment meters who owe money to their supplier, according to Ofgem, and it is thought tens of thousands will be helped by the move."



http://news.sky.com/story/988437/new-switch-and-save-option-on-energy-bills

spiro

Whilst this helps those in debt to switch supplier, it will impact the loosing suppliers profit (they loose 10% of debt transferred) margin and therefore impact the costs for those who do pay.

pooch

Was just about to post something similar.

This change is not effective until 1st November 2012

http://www.google.com/hostednews/ukpress/article/ALeqM5gWP27_MLY5hYV3Nf5fUhtJbZz5Cw?docId=N0327121348279303288A

pooch

spiro wrote: »

Whilst this helps those in debt to switch supplier, it will impact the loosing suppliers profit (they loose 10% of debt transferred) margin and therefore impact the costs for those who do pay.

Not saying you are wrong, but do you have a link to support your post please?

I would have thought all the debt would be transferred to the new supplier. If not, a person in debt could soon whittle down their debt by continuously switching between the 6 major suppliers couldn't they?

Or are you saying that the customer still has to repay the full amount originally owed but the new supplier makes 10% on the switching process? In which case it'll probably be a case of swings and roundabouts.

jalexa

spiro wrote: »

Whilst this helps those in debt to switch supplier, it will impact the loosing suppliers profit (they loose 10% of debt transferred) margin and therefore impact the costs for those who do pay.

That is a very interesting heads-up on I assume "embargoed until this morning" news. At the time of posting the Ofgem website doesn't list the press release.:( Guess an incompetent Ofgem press office "suit" doesn't work Sundays.

Does this measure only apply to pre-payment debt? What about credit meter debt?

Does the losing supplier receive a 90% lump sum credit from the gaining supplier? That would vastly benefit their cash-flow. Surely it can't be as simple as that.

pooch

jalexa wrote: »

That is a very interesting heads-up on I assume "embargoed until this morning" news. At the time of posting the Ofgem website doesn't list the press release.:( Guess an incompetent Ofgem press office "suit" doesn't work Sundays.

Does this measure only apply to pre-payment debt? What about credit meter debt?

Does the losing supplier receive a 90% lump sum credit from the gaining supplier? That would vastly benefit their cash-flow. Surely it can't be as simple as that.

As I understand it, the change only applies to those with prepayment meters.

I don't really think a few hundred quid here or there will even make the slightest ripple to the cashflow of the 6 big suppliers.

spiro

pooch wrote: »

Not saying you are wrong, but do you have a link to support your post please?

I would have thought all the debt would be transferred to the new supplier. If not, a person in debt could soon whittle down their debt by continuously switching between the 6 major suppliers couldn't they?

Or are you saying that the customer still has to repay the full amount originally owed but the new supplier makes 10% on the switching process? In which case it'll probably be a case of swings and roundabouts.

The new supplier pays old supplier 90% of the value of the debt but collects 100% from the customer.

Cardew

spiro wrote: »

The new supplier pays old supplier 90% of the value of the debt but collects 100% from the customer.

Perhaps!

Can the 'new supplier' block a further move by the customer once the debt gets below £500?

Or can the customer move from company to company, especially if there are 'inducements' for switching - Do Quidco etc and Comprison websites offer cash-back for pre-pay customers?

Can a prospective new company refuse to take on a customer?

Wywth

Cardew wrote: »

Perhaps!

Can the 'new supplier' block a further move by the customer once the debt gets below £500?

Or can the customer move from company to company, especially if there are 'inducements' for switching - Do Quidco etc and Comprison websites offer cash-back for pre-pay customers?

Can a prospective new company refuse to take on a customer?

Remember, it is only the big 6 suppliers that have agreed to this, so smaller suppliers may not support.

As I understand it, from 1st November then the new supplier won't object to a further switch as long as the amount owed is not more then £500

Cashback from comparison sites or switching sites may be available, subject to their own terms and conditions.

I'm not sure on what grounds, if any, a new company may object to an application to take over a supply, but I don't think they will if it is only because the customer has an existing debt <£500 applied to their meter.

undaunted

I would look at this with scepticism until it's shown to work in practice.

There is already supposedly a means of "debt assignment protocol" for the £200 it is currently set at. (Why it refers only to PPM I'm not sure but it does)

I'm sure I read somewhere (in an Ofgem / related document) that whilst it exists it has never been used as suppliers find the process far too cumbersome.

This 2009 report says "very rarely" http://www.ofgem.gov.uk/Sustainability/SocAction/Monitoring/SoObMonitor/Documents1/Social%20obligations%202009%20annual%20report.pdf

Quite why the increase from £100 to £200 and now £500 should affect that is unclear to me.

Terrylw1

undaunted wrote: »

I would look at this with scepticism until it's shown to work in practice.

There is already supposedly a means of "debt assignment protocol" for the £200 it is currently set at. (Why it refers only to PPM I'm not sure but it does)

I'm sure I read somewhere (in an Ofgem / related document) that whilst it exists it has never been used as suppliers find the process far too cumbersome.

This 2009 report says "very rarely" http://www.ofgem.gov.uk/Sustainability/SocAction/Monitoring/SoObMonitor/Documents1/Social%20obligations%202009%20annual%20report.pdf

Quite why the increase from £100 to £200 and now £500 should affect that is unclear to me.

The process is in the customers hands. If they want to switch and they are below SLC14's limit, they can be objected to.

So, the issue is why aren't PPM debt customers switching. Probably because they assume they can't with a debt or are pressured not to.

The fact suppliers don't like it irrelevant in that if they objected on the basis is cumbersome processes, they would be in breach of SLC14's strict objection reasons.

So, I suspect they may have missed the point there, probably strategically to avoid having to address the consumer knowledge piece...;):D