Is it lawful fr an energy company to charge exit fees?

imported_Ducklet

Why do the companies charge exit fees, isn't this wrong as the market would have to be more competitive ?

Buzby

Completely lawful - the whole point of an exit fee is for customer retention - the consumer is required to factor this cost in to their calculations in order to work out whether the deal is good for them or not. The fact many do not, then express surprise and complain (like the fee required to give up an ADSL BB connection) is their loss - but is certainly doesn't make the marketplace less competitive.

Those who join and switch on a whim are not cost effective to offer services to, so devices like these - it accepted - provide a small element of control, or at worst, compensation to the firm due to the customer departing.

backfoot

imported_Ducklet wrote: »

Is it lawful fr an energy company to charge exit fees?

Why do the companies charge exit fees, isn't this wrong as the market would have to be more competitive ?

The current laws (Regulations) can be found here:

http://www.ofgem.gov.uk/Markets/RetMkts/Compl/pricechange/Pages/Noticeofpricechanges.aspx

The basic principle is that following a price increase an exit fee cannot be charged.

If I were the Regulator I would prohibit Exit Fees on all variable price contracts/products allowing free movement between suppliers where cheaper products become available.This would promote increased price competition.

For fixed price contracts, I would allow them based on the cost reflective elements of switching incurred by the losing Supplier.

george1939

backfoot wrote: »

The current laws (Regulations) can be found here:

http://www.ofgem.gov.uk/Markets/RetMkts/Compl/pricechange/Pages/Noticeofpricechanges.aspx

The basic principle is that following a price increase an exit fee cannot be charged.

If I were the Regulator I would prohibit Exit Fees on all variable price contracts/products allowing free movement between suppliers where cheaper products become available.This would promote increased price competition.

For fixed price contracts, I would allow them based on the cost reflective elements of switching incurred by the losing Supplier.

I agree with backfoot

aym280

According to Which?
1. Don't pay increased prices or exit fees to your supplier
If your energy company raises prices you shouldn't have to pay a penalty for switching away from them, as the price change is effectively a change in the contract you originally signed up to.

If it tries to charge you an exit fee or says you will have to pay the higher rates until your switch goes through, then you should complain - refer your energy company to Ofgem's Standard Licence Conditions 23 and 24, which sets these rules out.

You need to tell your energy supplier you wish to leave by the date the higher prices come into effect. Also make sure that your new supplier contacts your old one within 15 working days to tell them you're switching.

.... Anybody sheds a bit more light on this?:rotfl:

MillicentBystander

Exit fees (certainly on variable tariffs) are the absolute enemy of true competition yet the regulator/Govt allows them to persist whilst also stating we have a competitive energy market. No we haven't.

Wywth

aym280 wrote: »

According to Which?
1. Don't pay increased prices or exit fees to your supplier
If your energy company raises prices you shouldn't have to pay a penalty for switching away from them, as the price change is effectively a change in the contract you originally signed up to.

If it tries to charge you an exit fee or says you will have to pay the higher rates until your switch goes through, then you should complain - refer your energy company to Ofgem's Standard Licence Conditions 23 and 24, which sets these rules out.

You need to tell your energy supplier you wish to leave by the date the higher prices come into effect. Also make sure that your new supplier contacts your old one within 15 working days to tell them you're switching.

.... Anybody sheds a bit more light on this?:rotfl:

There was an MSE article about this almost 2 years ago
(or about 18 months before this thread you just resurrected was created)

http://www.moneysavingexpert.com/news/utilities/2011/07/escape-energy-lock-ins-as-prices-soar