Ofgem retains ban on acquisition-only tariffs
Press release
- Publication date
- Industry sector
- Supply and Retail Market
- Licence type
- Electricity Supply Licence
- Gas Supplier Licence
Rules preventing energy suppliers from offering lower prices exclusively to new customers will remain in place to ensure all households can access the best available deals.
The regulator has decided to keep the ban on acquisition-only tariffs (BAT) – which ensures all customers have access to the best deals – after hearing the views of concerned consumer groups and the majority of suppliers demanding fairer treatment for existing customers.
During a statutory consultation in May, campaigners warned that proposals to remove the ban risked returning to an unfair market for inactive switchers – often referred to as the 'loyalty penalty' – and damaging consumer trust.
They added that the ban also ensures that millions of customers in debt, who may not be able to switch to a new firm for months or even years, are able to access a better deal with their current supplier.
Having considered the views of all respondents, Ofgem has decided to keep the BAT in place at least until its current expiration date of 31 March 2025.
Charlotte Friel, interim director for consumer protection and retail markets, said:
“We have heard the voices of consumers loud and clear – and we have responded.
“We are committed to acting in the best interest of all customers and the feedback we get from the public, industry, consumer groups and charities is vital in shaping the work we do. The responses we received showed a strong strength of feeling against short-term cut-price tariffs that shut out a supplier’s existing customers.
“Whilst competition is an important part in driving better standards, so too is consumer trust – and it is clear that denying the best deals to all risks undermining the progress we have made to restore confidence in the energy market.
“Customers have the right to vote with their feet and switch suppliers for better service, or more support, but retaining the BAT will mean that they don’t have to keep moving to chase the best rate.”
The BAT was introduced as a temporary measure in April 2022 to provide more stability at the height of the energy crisis, removing often risky short-term discounted tariffs intended to attract customers from other suppliers.
With the market improving, Ofgem launched a statutory consultation expressing a minded-to position to end the ban from 1 October, 2024 – reasoning that it could provide more choice for switching customers, while the price cap remains in place to protect existing customers from paying over the odds for their energy.
Based on the feedback from this consultation, the regulator has decided to let the ban continue at this time to better understand its impact on the retail market.
The longer term future of the BAT will be considered as part of Ofgem’s ongoing comprehensive review of the energy sector. The regulator is currently considering responses to a call for input exploring the future of price protection – including the suitability of the price cap in an evolving market and the potential role that a permanent ban on acquisition tariffs may play in the future model.
The regulator will report on its findings in due course.
Notes to editors
- Read our decision on the future of the ban on acquisition-only tariffs.
- On 23 February 2024 Ofgem published a decision to extend the ban on acquisition-only tariffs (BAT) until 31 March 2025. Alongside that decision, we confirmed that we would issue a statutory consultation on whether to remove the BAT following 6 months of this extension.
- As a result of today’s decision, the existing extension will continue for its entirety, until 31 March 2025.
- Alongside this consultation, we recently published a discussion paper inviting views on the price cap’s medium to long-term future, which includes options to reform or replace it. We recognise that a version of the BAT could have a place in a future market and will continue to consider how this could look.
- The BAT was introduced as a temporary measure in April 2022, to complement the Market Stabilisation Charge in protecting consumers from stability risks during the wholesale price crisis.
- The Market Stabilisation Charge ended at the end of March 2024, after Ofgem confirmed the decision to let it expire last year.