In an interview with the Daily Telegraph, Labour leader Ed Miliband has talked of a “rip-off consumer culture” that exists in Britain, and urged the Prime Minister to put a stop to ‘predatory’ practices that leave customers with a raw deal.
Miliband reserved particular criticism for companies levying disproportionate surcharges for things like holidays, banking and parking. He also suggested breaking up the big 6 energy firms and making pricing more transparent.
He has proposed that a new consumer watchdog should be setup, with responsibility for limiting fees levied on pensions, air travel and other services.
Miliband said: “In every area, you have to call time on the surcharge culture.
“Making a fair profit is important but it can’t be done in an underhand and predatory way.
“This is about power in relation to private services and how government can be on the consumer’s side. Lots of businesses recognise this. It’s part of how you build a competitive economy in the world.”
He continued: “It’s about the rules that government sets. This is a specific argument about a number of private services to the public…we’re not proposing to go back on taking the railways into private ownership but maybe in transition not enough was done to protect the public.”
Miliband said that we should follow the example of robust consumer legislation that exists in the US, and said that his proposals would actually encourage businesses to be more competitive. He added that, in the current economic climate, it is vital that all possible steps are taken to “relieve the burden” for consumers.
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After EDF increased its tariff by more than 15% in November, in line with other major suppliers, the latest move may come as a surprise to many.
However, there has been a 9.2% decline in the wholesale price of gas, so they are only passing on around half of that saving to consumers.
Over the weekend, there was speculation that rival company Centrica (which owns British Gas) was planning to roll out a 10% reduction in household energy prices, but no announcement has been made as yet.
EDF has stressed that it was the last big energy supplier to increase its tariffs in the autumn, and that it was announcing a cut before any of its competitors.
Vincent de Rivaz, chief executive at EDF, said customers want “fair, clear and transparent prices.” He added customers want action rather than words, and highlighted the company’s record on pricing.
But are their customers happy with the service? A flood of complaints following the recent introduction of a new billing system suggests not.
Additionally, consumer champions Which? have just published their annual energy company satisfaction survey – EDF are ranked 5th out of the big 6 energy suppliers, with less than half of customers saying they were satisfied with the company or likely to recommend them to others.
Do you get your gas from EDF? Would you recommend them to others? Let us know.
Ofgem, the independent regulator of the energy sector, has hit Npower with a £2 million fine for not handling customer complaints properly.
Specifically, Npower had failed to record complaints properly or referred customers with grievances to the Energy Ombudsman’s redress service, according to Ofgem.
Ofgem has noted that all regulatory breaches have now been corrected by Npower.
A spokesman for the company said: “We are very sorry, we let our high standards slip on this occasion,” adding “a small number of processes were not correctly adhered to. We have zero tolerance for this type of issue and we’ll continue to work hard to make sure our customers are put first.”
The UK’s gas and electricity markets are dominated by the so-called ‘big six’ – Npower, British Gas, EDF Energy, E.ON, and Scottish Power. Complaint-handling at EDF is also being investigated by Ofgem at the moment, whilst British Gas was fined £2.5 million by the regulator in July, for the same offence.
Ofgem has introduced sweeping reforms in the retail energy market, and expects energy suppliers to make the most of this opportunity to “convince customers that they can be trusted,” according to the regulator’s Managing Director of Corporate Affairs, Sarah Harrison. She added that “this is the quickest way of restoring consumer trust in an industry badly tarnished by poor supplier behaviour.”
New complaint-handling regulations were introduced in October 2008, setting out minimum standards that customers should expect when making a complaint. These regulations were designed to form a counterpart to the work of the Energy Ombudsman, which was formed in 2003 and exists to deal with complaints that companies can’t resolve on their own.
Adam Scorer, of Consumer Focus, said: “It is welcome to see Ofgem willing to hammer home the point that unless energy companies start treating consumers fairly there will be a price to pay,” adding “the energy industry is one of the least trusted by consumers and people need to see real changes to customer service if this trust is to be rebuilt.”
Millions of households are due to receive letters from their energy suppliers advising them on how to reduce their monthly outgoings.
This announcement follows meetings between Prime Minister David Cameron and bosses at the ‘big six’ firms, as well as consultations with Ofgem (the industry regulator) and consumer groups.
Suppliers will be writing to customers to advise them on the savings they can make by switching payment methods, choosing the most suitable tariff, and getting subsidised or free insulation installed.
They have also agreed to include message on bills this winter reminding customers to check whether they might be able to get a better deal with another company.
The PM told bosses at EDF Energy, nPower, Scottish & Southern Energy, Scottish Power, British Gas and EON that it was ‘absolutely vital’ that they don’t cripple consumers with higher fuel bills when they’re already struggling with the rising cost of food and travel.
Cameron described the move as a “winter call to action” and said that the energy companies will be “permanently watched” to ensure they adhere to the pledges that have been made.
Ofgem recently released data indicating that the annual profit made by energy firms for each customer had risen from £15 in June to £125 in October. These figures were disputed by suppliers, however.
Before the end of the year, Ofgem will publish a report outlining how conduct in the industry can be improved, and how its activities can be made more transparent.
The average household now faces an annual energy bill of £1,345 – an increase of 81% since 2006.
If you are struggling with debt as a result of rising energy bills, we can provide you with confidential debt advice. Get in touch to speak to an expert today.