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Reaction to Consumer Focus report
Make It Cheaper responds to report from Consumer Focus, which states only 16% of the UK's micro-businesses currently switch suppliers for their energy - and re-iterates its support for making contract end dates more visible.
The latest report from Consumer Focus, entitled 'Under the microscope', says that, despite conditions improving, only 16% of the UK's micro-businesses (10 or less employees) currently switch suppliers for their energy. One of its key recommendations calls for suppliers to print contract end dates on bills "to make it easier for consumers to negotiate new terms with either their existing supplier or a new supplier". The idea is that - if you know your contract end date - you are less likely to get automatically rolled onto a new contract, a situation which typically adds around 30% to the energy bills of a typical small business. This recommendation is also expected to be echoed by Ofgem in its Retail Market Review update, coming out later this month.
Make It Cheaper has been debating issues associated with roll-over contracts with MPs, suppliers, and regulatory bodies since 2007 when we presented our case at a roundtable event that we organised in Westminster. It is easy to see that in a market environment lacking transparency or real competition, small businesses are on the losing end with disproportionate bargaining power. If business consumers are not equipped with the basic information required to enable them to drive down costs, they are unable to fulfil their role in fuelling economic growth and creating more jobs. It also represents a barrier to entry for new energy companies, creating an uneven playing field that favours large energy companies to the detriment of consumers and smaller competitors. If, as the Consumer Focus report points out, 28% of businesses are still unaware they'll be locked into different (possibly higher) prices if they do nothing at the end of their contract, it's no wonder that two-thirds end up getting rolled over.
So putting more information on bills about contract ends dates and explaining how to avoid a rollover is one of two simple, regulation-free measures changes that Make It Cheaper has long been campaigning for - and which will empower businesses to switch suppliers more easily. The other is to ask suppliers to send renewal letters by Recorded Delivery so that they have more chance of reaching - and being read by - the intended recipient. This letter being the only form of communication a supplier is obliged to use when about to roll a contract on to higher rates. One particular advantage of these measures is that they can be done straight away and would not require the outright banning of roll-over contracts, which would take several years to implement.
We have already received the support of two energy companies, E.ON and CNG, who have listened to the argument and, as a result of our campaign, volunteered to change the way they bill their business customers in order to make them more aware of their renewal terms. In our view this separates the good guys from the bad guys. And we're not alone in thinking that. As well as Consumer Focus, our campaign has won the support of many business organisations and MPs. Zac Goldsmith MP, for example, says: "I know from small businesses in my own constituency that being made aware of their contract end dates has helped them to save money. However, many others have fallen into the "roll-over trap" as a result of energy suppliers holding back information from their customers when sending out their renewals. All energy companies should sign up to Make It Cheaper's campaign."
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About Make It Cheaper
Established in 2007 and based in Central London with 110 staff, Make It Cheaper is the number one destination for businesses to get a better deal on their utilities and other services. It receives more enquiries and arrange more new contracts than any other business price comparison service. These include the business customers of major domestic price comparison services with whom Make It Cheaper has partnerships, as well as many nationwide trade associations and charity membership organisations. Acting on behalf of these customers with total impartiality and free-of-charge, Make It Cheaper offers year-on-year savings across a range of products including: business energy, telecoms, insurance and merchant services (chip & pin). By switching suppliers or helping to renegotiate deals with existing ones, it will typically save over 30% of costs - as well as a considerable amount of time that its customers can then spend on running their businesses. Make It Cheaper is currently ranked 39th in the Sunday Times Fast Track 100 and has a 2012 Net Promoter Score of 75%.