Ofgem leads radical shake up of energy switching process

Press release
Publication date
Industry sector
Supply and Retail Market
  • Ofgem approves suppliers’ proposals to cut switching time to three days after statutory two week cooling off period, by the end of 2014
  • Ofgem is leading radical reforms to put next day switching in place by end 2018 at latest
  • Proposals will also improve the reliability of the switching process
  • Faster and more reliable switching set to improve consumer confidence to shop around for a better energy deal

From the end of this year the time it takes to switch energy supplier will be cut to just three days after the statutory two week cooling off period after Ofgem approved suppliers’ proposals to speed up the process.

The changes coming in at the end of 2014 mean that once the customer signs up with a new supplier they will still have the 14-day cooling off period, with the switch completing three days after. Ofgem has been working with suppliers and DECC to speed up switching times.

Ofgem has also today published new proposals to make the switching process more reliable and put next day switching in place by the end of 2018 at the latest. This will be made possible by replacement of the IT systems used in the switching process, which were originally developed in the 1990s. These changes represent a significant modernisation of infrastructure which will help consumers take full advantage of the benefits of smart meters, and pave the way for reliable, fast and easy switching for all.

Dermot Nolan, Ofgem’s CEO, said: “Consumers can change their bank in seven days, their mobile phone in just a couple, but have to wait significantly longer to switch their energy supplier. We know that consumers want a reliable and efficient switching process, and that concerns about it going wrong can put them off shopping around for a better deal. So now that we have taken steps to make the market simpler, clearer, fairer, we are leading a programme which will deliver faster, more reliable switching.

“We hope this will give consumers more confidence to get out there and start shopping around. You can save upwards of £200 by changing supplier and independent advice is available from the Be An Energy Shopper website at www.goenergyshopping.co.uk.”

Currently switches take around five weeks, including a statutory upfront 14-day cooling off period (see notes to editors). And from this August, new Ofgem rules come into force meaning suppliers could face investigation and fines if they cannot meet these timescales.

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Notes to editors

1. About Ofgem

Ofgem is the GB energy regulator.  Everything we do is aimed at making a positive difference for consumers.  For more information on Ofgem please see our website at www.ofgem.gov.uk

2. Cooling off period

A ‘cooling off’ period allows a customer to change their mind, terminate their new contract and go back to their original supplier. New regulations, that come into force in June 2014, provide a statutory 14-day cooling period for domestic consumers.

At the moment, it takes around five weeks for suppliers to complete a switch.  This incorporates the two week cooling off period upfront and then is followed by a three week period where the actual switch takes place.  Following Government’s challenge to industry to speed this up, Ofgem has worked with industry and agreed voluntary changes to their processes to reduce this to two and a half weeks by the end of this year. This includes the two week cooling off period upfront, and then the switch will complete by the end of the third day.

Ofgem’s new proposals would see next day switching brought in - where after choosing a supplier, the customer joins them at the start of the next day. The cooling off period would still remain. However, crucially, it would take place after the switch, allowing customers to enjoy their new service the very next day.

3. New enforcement rules

From this August new Ofgem rules will come into force meaning suppliers could face investigation and fines if they do not complete the switching process within a five week period (comprising two weeks cooling off period upfront and three weeks to make the switch). The rules also mean suppliers must stamp out cases where customers are switched by mistake.

4. About our Moving to Reliable Next Day Switching Consultation

Ofgem has today published a consultation on the third part of its strategy to improve the switching process for consumers.  Proposals include reforms to further reduce switching times to one day and to introduce a new centralised switching service to efficiently manage dual fuel transfers.  For more information go to: Change Supplier.

5. ‘Be An Energy Shopper’ campaign

The ‘Be An Energy Shopper’ campaign has been launched by Ofgem in response to consumer demand for impartial advice on how to compare tariffs in the gas and electricity markets.  An easy guide has been set up at www.goenergyshopping.co.uk to show how the recent changes to the energy market can help them to compare tariffs and get a better deal on their gas and electricity bills.

 

For further press information contact:

Chris Lock: 020 7901 7225

Lisa O’Brien 020 7901 7426

Dafydd Wynn 0203 263 9943

Out of hours media contact number: 07766 511470