In 2013, we introduced a major package of reforms aimed to make the market ‘simpler, clearer and fairer’ for consumers. We launched the reforms following our Retail Market Review, which found that the market wasn’t working as well as it could for consumers.
We have since referred the market to the Competition and Markets Authority (CMA), and following their review are implementing and proposing further changes. You can find out more about these at Implementation of the CMA remedies.
Here you can get an outline of the main aspects of the Simpler, Clearer, Fairer reforms and download key related documents.
Simpler, Clearer, Fairer overview
- We banned complex tiered tariffs and introduced a new tariff structure, a unit rate (or unit rates for time of use tariffs) and a standing charge (which could be zero), to make tariffs more consistent and easier to compare.
- We limited the range of tariffs suppliers could offer to four core tariffs for both gas and electricity.
- We condensed the cash discounts suppliers could offer to two options:
- A dual fuel discount, when a consumer took both gas and electricity from the same supplier.
- A paperless discount when consumers opted to manage their accounts online.
We obligated suppliers to display these in a simple pounds-per-year format. Additionally, we also banned restricted discounts that made it difficult to compare costs of tariffs.
- to give all their customers personalised information on the cheapest tariff they offer, including in bills, annual statements and other communications.
- to provide more informative bills, which include key information about the customers’ tariff and how much energy they use.
- we required suppliers to give a comparison of old and new prices in a simple pounds and pence format when informing customers of a price increase.
- to provide more informative and easy to use Annual Statements, which include facts about the customer’s tariff (including discounts), tariff end date, whether any termination fees apply, and information on how to switch suppliers.
- to give a comparison of old and new prices in a simple pounds and pence format when informing customers of a price increase.
We also required suppliers to introduce new tools to help customers compare tariffs:
- we required suppliers to produce a Tariff Information Label for each of their tariffs in a standardised way. The label contains a number of key facts about the tariff, including payment method, discounts, termination fees, and an estimate of the annual cost of the tariff for a typical consumer.
- we required suppliers to use a new Tariff Comparison Rate in bills and a range of other communications to provide ‘at-a-glance’ information to help customers compare tariffs - similar to the annual percentage rate used to compare credit cards.
- we required suppliers to provide personalised annual cost projections based on the customer’s actual consumption (or, where this is unavailable, the best estimate of their consumption). This included on bills and a range of other communications, so customers could compare tariffs more accurately when assessing their options.
The onus was put on suppliers to embed fair treatment of consumers in every level of their organisation. This was to cover all dealings with the consumer, including information sent in writing as well as calls with the customer regarding a query or complaint.
The standards required suppliers to:
- Carry out all these actions in an honest, transparent and professional manner.
- Ensure that any information to consumers is communicated in clear jargon-free language.
- Make it easy for consumers to contact them, act promptly and courteously to put things right.
- Publish yearly statements presenting the actions taken to treat consumers fairly.
Alongside the standards, we also implemented the following measures which meant:
- Consumers no longer have to inform their current supplier if they intended to switch.
- If a customer switches in the case of a price increase, even if this is after the date the price rise comes into effect, as long as they switch soon after the increase and it completes in a reasonable time, the customer will not have to pay the higher rates.*
- If a customer signed up to a fixed-term deal, on or after 15 July 2013, the supplier is not able to increase the price. **
- Customers would receive a notice 42-49 days before the end date of a fixed-term tariff to tell them the tariff is coming to an end. If a customer chose to switch after this point, suppliers can’t charge a termination fee.
- If a customer chose not to switch at the end of a fixed-term tariff, they can’t be rolled onto another fixed-term tariff with a termination fee. They would instead be rolled automatically onto the cheapest standard tariff with the supplier.
- Any customers who are on old, expensive, evergreen tariffs that are no longer open to new customers (so-called ‘dead tariffs’), would be switched to their supplier’s cheapest variable rate from June 2014.
*Customers with outstanding charges on their accounts may need to pay these off before they could benefit from these rules.
**There are limited exceptions to this rule in the case of ‘staggered price’ tariffs, where the amount and timing of price changes are set out in advance, and ‘tracker’ tariffs, where the price is linked to an independent index over which the supplier has no control.