Cooling off periods
The Office of Gas and Electricity Markets (Ofgem) regulates the energy market in the UK. The body sets out codes of conduct and contractual obligations which energy suppliers are required to adhere to. These regulations are often different for domestic and business energy customers, but in both cases are designed to protect consumers from unfair treatment.
One of the features of an energy contract that differs between domestic and business customers is the cooling off period. This is a specified period of time that is made available to consumers after they have made a purchase (arranged a switch), within which they can cancel that purchase without facing a financial penalty.
For more information on how domestic and business energy contracts differ, click here.
Cooling off period for domestic energy:
For domestic energy customers, this cooling off period is typically fourteen days from the date they agree to a new energy tariff. Whether the purchase itself is done over the phone or online, suppliers are required to send customers the terms and conditions of the tariff in writing, including the period of time they accept as a cooling off period.
Cooling off period for business energy:
For business energy customers, the cooling off period is slightly more ambiguous as Ofgem do not impose an industry standard for business energy contracts. As such, different suppliers will have different practices in place when it comes to business energy – but you’ll find that most do not offer a cooling off period to their business customers. This is typically because business contracts are tailored specifically to each business customer, so there is less chance of the customer changing their mind after accepting a deal.
Implications of no cooling off period:
The absence of a cooling off period means it is especially important to compare deals across suppliers, as it helps make sure the energy contract you ultimately choose is appropriate for your business needs. It is also important to make sure you fully understand the terms and conditions of your new contract before committing to a purchase. Be aware of the prices you will be paying for electricity or gas, the contract end dates and notice periods, the payment method, and any further steps you may need to take.
If you’re making the purchase over the phone, your supplier or broker will explain the key terms and conditions to you before you commit to the contract. Once you have agreed to the contract, you should receive written copies of the contract and its full terms and conditions within ten days.
Cancelling a business energy contract:
Most businesses can switch energy suppliers up to six months ahead of the end date on their current contract. This helps make sure the contract is as accurate as possible, and that it reflects the most recent rates in the market. Once you have agreed to a new contract, you can still cancel that agreement, but you can only do so before the contract comes into effect.
For more information on the conditions that allow businesses to switch contracts, click here.
Your new contract comes into effect when your current contract expires. Once this happens, you will not be able to cancel your new contract until its end date – but you can arrange a switch. This switch will take place when your existing deal ends.
For help finding the end date of your current energy contract, see our business energy small print pointer.