The regulators and watchdogs that are supposed to protect consumers’ interests in the UK get plenty of stick when they fail in their roles, but recently one regulator in particular has got it right. Confused.com writer, Chris Torney reveals why.
Recently the Office of Fair Trading faced heavy criticism when it failed to crack down on hugely expensive payday loans following an investigation into the sub-prime credit sector.(You can find out more about that here.)
And the Financial Services Authority has been effectively dismantled by the new government, to a large extent as a result of its failure to deal with the banks responsible for the credit crunch.
So it’s only fair that we praise regulators when they get things right.
Ofgem shows its muscle
The latest example of a watchdog proving its worth comes from Ofgem, which oversees Britain’s gas and electricity providers.
Ofgem has just revealed the results of recent work to stop households being ripped off by power companies. The body says it has forced companies to reduce the premiums charged to homes which use pre-payment gas and electricity meters, and suppliers have also been told to cut tariffs in any areas where they used to operate as a monopoly.
Ofgem has also taken steps to make bills clearer, with the aim of allowing customers to compare deals from rival providers more easily when deciding whether to make a switch.
High meter charges are simply not fair
The extra charges imposed on pre-payment customers have long been one of the most unfair aspects of the UK’s energy supply. Pre-payment meters are typically found in the homes of those on the lowest incomes, and are used when companies are unwilling to allow customers to buy their power on a use-now, pay-later basis.
If a particular customer has a history of failing to pay their bills, it is reasonable that their supplier should insist on installing a pre-payment meter.
But what is not justifiable is that the cost of gas and electricity supplied on pre-pay is considerably higher than through normal meters. This means that not only do the poorest homes have to pay up front for their power, they also have to pay more for it.
Ofgem now claims to have reduced the average extra expense of a pre-payment meter by almost 40 per cent, from £111 a year to £69. Energy supplied through a pre-payment meter remains more expensive – providers say the charges reflect the costs of installing and running this kind of meter – but the premium has been substantially cut.
Ofgem has also taken steps to get a better deal for customers in rural areas who receive an electricity supply only. They are not able to take advantage of dual-fuel discounts, which are available to customers who sign up for gas and electricity from the same company.
All in all, these steps from Ofgem are very welcome: they don’t make the energy market completely fair, but they are certainly taking it in the right direction.
Have thoughts on Ofgem’s measures? Then tell us here.
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