Exit fees and Supply Date

wavelets

Hengus wrote: »

The Ofgem Press Release which came out when the change of SLCs was introduced was as follows:

Quote:

1. Fixed term contracts

Suppliers will be banned from increasing prices, or making other changes to fixed term contracts which are to the disadvantage of a customer. The only exceptions to this are “tracker” tariffs that follow an independent index over which the supplier has no control, or structured price increases set out in advance which are fully in line with consumer protection law. This new rule applies to any contracts entered into on or after July 15 2013.

Suppliers will be required to notify customers that their current fixed-term is coming to an end between 42 and 49 days before the contract ends.

Between this notification period and the end of the fixed term contract, suppliers will be banned from charging a termination fee should the customer decide to switch.

Unquote

I have seen nothing that changes this statement; however, I do accept that people now generically talk about a 49 day switching window. (In truth, it is 69 days but that is rarely mentioned by journalists)

In sum, it has to be your decision when to switch.

Hence why MSE then sought to clarify the situation directly with Ofgem, and now reports that a summary of that response to help us all understand the position more clearly

The question raised was in relation to when ofgem (within this term) considered a switch to occur e.g. when applied for by the consumer, when the old supplier becomes aware of it etc.

The answer given by Ofgem was the date on which the new supplier becomes the consumer's supplier (and hence the old supplier ceases supply to that consumer)

You are correct, there is no change to the above Ofgem statement you quoted - as there is no need; it is correct. There is a 49 day switching window, and the supplier is expected to notify their customer of this window within the first week of entering it.

Streaky_Bacon

Hi wavelets.

I should have probably said "not as universally agreed as I thought".

Having had a quick read of SLC22C, my interpretation is that it actually prevents a supplier from initiating a new fixed term, and then claiming a termination fee (per 22C.6)

As far as I can see, the relevant rules for the switching window are actually are contained in Section 24 of the Gas and Electricity Supply Licences Standard Licence Conditions.

s24.8

"unless the Domestic Customer has already entered into a new Fixed Term Supply Contract with the licensee or paragraph 22C.5 of standard condition 22C applies, a Domestic Customer is entitled to switch to any other Electricity Supplier at any time during or after the Switching Window without having to pay a Termination Fee; "

and s24.17

"For the purposes of this condition “Switching Window” means the period which begins 49 days before the date the fixed term period of a Fixed Term Supply Contract is due to end and which ends on the date the fixed term period of a Fixed Term Supply Contract is due to end."

with 22C.5 requiring the consumer to expressly agree in writing.

wavelets

Streaky_Bacon wrote: »

Hi wavelets.

I should have probably said "not as universally agreed as I thought".

Having had a quick read of SLC22C, my interpretation is that it actually prevents a supplier from initiating a new fixed term, and then claiming a termination fee (per 22C.6)

As far as I can see, the relevant rules for the switching window are actually are contained in the Electricity Supply Standard Licence Conditions and the Gas supply standard licence conditions.

s24.8

"unless the Domestic Customer has already entered into a new Fixed Term Supply Contract with the licensee or paragraph 22C.5 of standard condition 22C applies, a Domestic Customer is entitled to switch to any other Electricity Supplier at any time during or after the Switching Window without having to pay a Termination Fee; "

and s24.17

"For the purposes of this condition “Switching Window” means the period which begins 49 days before the date the fixed term period of a Fixed Term Supply Contract is due to end and which ends on the date the fixed term period of a Fixed Term Supply Contract is due to end."

Yes, suppliers cannot enter you into a new fixed term agreement and apply early exit fees to that, unless you specifically agree and request them to put you onto such an agreement.

But I'm not sure that is what you were orginally asking about, was it?

System

Streaky_Bacon wrote: »

and s24.17

"For the purposes of this condition “Switching Window” means the period which begins 49 days before the date the fixed term period of a Fixed Term Supply Contract is due to end and which ends on the date the fixed term period of a Fixed Term Supply Contract is due to end."

Mea culpa: I hadn’t picked up on that definition.

Streaky_Bacon

wavelets wrote: »

Yes, suppliers cannot enter you into a new fixed term agreement and apply early exit fees to that, unless you specifically agree and request them to put you onto such an agreement.

But I'm not sure that is what you were orginally asking about, was it?

No, it wasn't.

I was just noting that with all the talk about s.22, the actual rule seems to be in s.24

It seems that the only way that s.22 has any effect, is that if the supplier has fulfilled all of the requirements AND the consumer has expressly signed up, in writing, to a new fixed term, then the switching window no longer applies.

Plenty of people (including So Energy and MoneySupermarket) seem to be confused on this point. They state 42 days, which comes from s.22 rather than s.24.

[Deleted User]

@Streaky Bacon

One issue not discussed so far is when does the new supply tell the old supplier of the switch request? Because that timing will be important in the "can I initiate a switch outside of the 49 day window".

So if the new supplier sends off a switch request quickly then the old supplier will legitimately be able to charge exit fees if the request is received before the switching window opens.

So that bit is a gamble as I've seen no published data on that subject.

Streaky_Bacon

gsmlnx wrote: »

@Streaky Bacon

One issue not discussed so far is when does the new supply tell the old supplier of the switch request? Because that timing will be important in the "can I initiate a switch outside of the 49 day window".

So if the new supplier sends off a switch request quickly then the old supplier will legitimately be able to charge exit fees if the request is received before the switching window opens.

So that bit is a gamble as I've seen no published data on that subject.

I think this is covered by s24.8(a)

24.8
In relation to each Fixed Term Supply Contract, the licensee must ensure that

(a)
a Domestic Customer is entitled to take steps to facilitate changing to any other Gas Supplier (but not complete the process of changing supplier) at any time without having to pay a Termination Fee;

(b)
unless the Domestic Customer has already entered into a new Fixed Term Supply Contract with the licensee or paragraph 22C.5 of standard condition 22C applies, a Domestic Customer is entitled to switch to any other Gas Supplier at any time during or after the Switching Window without having to pay a Termination Fee;

on the basis that the switch request, even when received, is merely a "step to facilitate changing" per 24.8(a), but not the actual switch, per 24.8(b).

I suppose, if the switch is entirely under control of the current supplier, they could cynically make sure that they process it immediately to ensure that the switch happens before the 49 days, and then claim the exit fee.

Not sure if that is at all practical for them to do so but, just in case it is, perhaps it is wise to wait until the 49 day actually starts, as you say.

With day 49 being Jan 31st, I reckon that day 1 is Dec 13th. So I might set up the switch on Dec 14th.

Streaky_Bacon

Well, the plan to wait until the 14th had backfired.

I was hoping to avoid the £60 exit fee from Sainsburys, but it turns out that So Energy have switched from their So Ox tariff to their So Panda tariff today!

The annual difference in price between the two tariffs, with my personal projection? £60! :mad:

I'm pretty sure that if I had applied yesterday I would have been OK, bearing in mind the time to switch.