Misleading personal projections

oliverbrown

On my latest bill from E.on I notice it says I could save ‭£148‬ by switching to Fix Online v36. The thing is, my current package is Fix Online v21 which is actually slightly cheaper than Fix Online v36. E.on are calculating that when my current package ends in 3 months, I will spend 9 months on their most expensive tariff, which is a ridiculous assumption.

It seems nothing more than a licence to trick people into signing up to deals which cost them more money, not less. Why are Ofgem allowing this?

JJ_Egan

That is based upon Ofcom rules /based upon standard tariff.

See multiple identical posts going back years .

oliverbrown

A nice little earner then. Consumer be damned.

matelodave

oliverbrown said:

A nice little earner then. Consumer be damned.

No, it should be "consumer beware" - you should always do your own calculations

oliverbrown

matelodave said:

oliverbrown said:

A nice little earner then. Consumer be damned.

No, it should be "consumer beware" - you should always do your own calculations

Which doesn't preclude regulators from preventing companies from attempting to mislead people. Otherwise why bother having them?

JJ_Egan

Cannot be misleading if they are following Ofcom rules .

Personally they should do away with comparison sites etc ,
then savings can be for the few not the many .

Gerry1

oliverbrown said:
Which doesn't preclude regulators from preventing companies from attempting to mislead people. Otherwise why bother having them?

It's the useless Ofgem misleading people, not the energy companies; Ofgem set these utterly daft rules and the energy companies and comparison websites are only doing as they have been instructed.  It's just another example of why Ofgem are totally unfit for purpose.

Fortunately the CEC defaults to showing sensible comparisons.  If only they'd show all suppliers and alert you to all the better deals that subsequently come along, as it says on the tin...

oliverbrown

Gerry1 said:

oliverbrown said:
Which doesn't preclude regulators from preventing companies from attempting to mislead people. Otherwise why bother having them?

It's the useless Ofgem misleading people, not the energy companies; Ofgem set these utterly daft rules and the energy companies and comparison websites are only doing as they have been instructed. 

I found this page on Ofgem's site which seems to suggest suppliers and comparison sites are free to "come up with their own methodologies": https://www.ofgem.gov.uk/publications-and-updates/decision-estimated-annual-cost-domestic-consumers

We have decided to amend the methodology that suppliers and some price comparison sites are required to follow when estimating consumers’ annual costs. The change will allow suppliers and comparison sites to come up with their own methodologies for estimating a consumer’s annual costs

Talldave

Gerry1 said:

It's the useless Ofgem misleading people, not the energy companies; Ofgem set these utterly daft rules and the energy companies and comparison websites are only doing as they have been instructed.  It's just another example of why Ofgem are totally unfit for purpose.

That's what happens when you allow ignorant, do-good, civil servants to meddle with something they don't really understand.  It is utterly stupid that consumers can be presented with a "you can save" figure which encourages them to switch to a tariff that's more expensive than the one they're on.  The premise that consumers using a comparison website will spend n months of the coming year on their supplier's standard tariff is totally illogical - if that were the case, they wouldn't be using a comparison website would they?

Gerry1 said:

Fortunately the CEC defaults to showing sensible comparisons.  If only they'd show all suppliers and alert you to all the better deals that subsequently come along, as it says on the tin...

The CEC emailed me recently to inform me that my year out of date tariffs could be beaten by current offers on the market, an indication of how often I don't use CEC.  However, out of curiosity I logged into the CEC and updated my details.  Later the same day, the CEC emailed me again to inform me  that the tariffs I had now deleted from my account could be beaten.  It really is useless and not worth the aggro.

Former_E.ON_Company_Representative:_Malc

oliverbrown said:

On my latest bill from E.on I notice it says I could save ‭£148‬ by switching to Fix Online v36. The thing is, my current package is Fix Online v21 which is actually slightly cheaper than Fix Online v36. E.on are calculating that when my current package ends in 3 months, I will spend 9 months on their most expensive tariff, which is a ridiculous assumption.

It seems nothing more than a licence to trick people into signing up to deals which cost them more money, not less. Why are Ofgem allowing this?

Hello oliverbrown and already some good advice on here - thanks all.

We let customers know on every bill and statement if we think they could pay less by making changes to their existing arrangements. This might include changing tariff, payment method or meter.

The Personal Projection is an estimate of how much we think their energy usage will cost over the next 12 months. This is based on everything we know at the time - past usage, how long is left on the current tariff with the remainder on our standard Energy Plan tariff. We use Energy Plan prices as part of the estimate as this is what a customer will automatically go on at the end of their current deal if they do nothing. As others have said, this is in line with current industry practices.

This estimated nature of the calculation and the use of Energy Plan prices in part is explained in the 'could you pay less' message.

Totally understand, MSE users won't allow themselves to default to a standard tariff. This isn't the case with everyone and these messages are aimed at our entire customer base. They're designed to raise awareness so customers know they need to think about planning ahead for when their existing tariff ends. They're meant to encourage customers to look at alternatives including changing supplier (noted in bold at the end of the message).

Hope this explains oliverbrown. Please let me know if you need any more details as happy to help.

Malc

oliverbrown

Hi Malc,

Thanks for your reply.

As I say the end effect of it is that the "you could save £x" is almost meaningless, and encourages people to switch to tariffs more expensive than the one they are already on.

The assumption that the majority or even a large minority will let themselves lapse to standard variable is an unreasonable one, especially since you are obliged to encourage people not to lapse onto standard variable as their existing package ends.

It may be "industry practice" but that doesn't make it a good practice, and as believe the guidelines allow you to implement better methodologies than this, maybe you should.