Are we about to witness a major sea change in the relationship between financial services companies and consumers, a change that will give power back to consumers? I truly hope so.
For years, far too many of these companies have treated consumers with near contempt. The result has been shoddy customer service, longstanding customers treated as second-class citizens compared to new customers and widespread profiteering at the expense of all customers.
Maybe this is all now about to change with the recent decision by consumer lobby group Which? to launch its Big Switch campaign, designed to get tens of thousands of households a better energy deal.
It's a marvelously conceived idea, primarily because it's so simple and has been launched against a backdrop of widespread hostility towards the big energy suppliers.
How it works...
It goes as follows. Which? gets households to sign a petition demanding they want cheaper energy bills. Armed with this petition, Which? then approaches all the energy suppliers and asks them to give it their best energy deal. The supplier with the most competitive tariff wins the business and Which? then switches all the householders to the new improved deal (though this is not compulsory).
According to Richard Lloyd, the Which? executive who masterminded this ‘reverse auction' with a little help from TV presenter Jonny Maitland and online campaigning community 38 Degrees, Big Switch is all about ‘people power'.
"What we are doing will hopefully help those struggling to pay their energy bills at a time when unemployment is rising and household finances are under attack," he says. "People are angry with the energy companies and this is our way of helping them fight back."
Will this show of people power work? It did in Holland.
Last May, the Dutch equivalent of Which? Consumentenbond, launched a campaign that resulted in 7,000 people signing up and 25% then switching to a new energy deal with the winning bidder. The average saving was £250. Similarly, a local bargaining project in Australia resulted in 1,000 homeowners getting their mortgage rates shaved.
Politicians have been swift to back the campaign. Energy secretary Edward Davey said: "I'm delighted Which? has developed Big Switch as I have long believed that collective purchasing will be a game-changer in terms of handing power back to consumers." And Caroline Flint, Labour's energy spokesperson, said: "This is a simple but potentially trailblazing way to help bring down soaring energy bills."
For all these fine words, it's too early to see whether the campaign will be a big success in Britain. Certainly, Which? has blotted its own copybook by not coming clean straightaway on what fees it will earn from switching people across to its chosen supplier (a bit rich for an organisation that prattles on about the fi nancial services industry's need for full disclosure and transparency).
But if it is a success - and I think it will be - it will only mark the beginning. Which? has already said other Big Switch campaigns will be launched in its wake. And I wouldn't be surprised if other campaign groups jumped in and launched similar pro-consumer campaigns – including Moneywise. We could see campaigners asking mortgage borrowers if they want to switch en masse to a lender with a more competitive standard variable interest loan rate, for example.
Summing up the attraction of the Big Switch, Jonny Maitland says: "Who would not want to join a party where the only thing to lose is a sizeable chunk of your energy bill?"