Energy firms will be forced to make it quicker and easier for consumers to switch providers, energy secretary Ed Davey promised today, with the switching process taking no longer than 24 hours.
Davey will force energy companies – in particular the big six firms – to compete much more actively for consumer's custom, as part of reforms unveiled by the Department of Energy and Climate Change (DECC).
As well as the government's plans to make switching simpler and quicker, Davey also said the government would launch a "probe" into energy firms' accounts, to make them more transparent on profits and prices.
Davey said: "The energy industry needs to change to put consumers in control. That means making it easy for people to change supplier to save money, it means regular market assessments to check their behaviour, and it means tougher penalties for market manipulation and putting an end to opaque finances.
"We want to push energy companies to make switching quicker and easier – because consumer action can force suppliers to change their ways."
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The news was greeted with a cautious welcome by consumer groups. Clare Francis, editor-in-chief at MoneySuperMarket.com, said: "We fully support proposals to force the "Big Six" to offer clearer information because households need help to reduce the amount they spend to heat and light their homes. Breaking down barriers to switching is crucial.
"The latest round of price hikes does seem to have struck a chord though. It appears that many people have reached their tipping point and are no longer prepared to sit back and simply accept higher bills. We are seeing more people take action and move to a cheaper deal, but there is still a long way to go before switching becomes the norm."
Davey also said the government would look to deal more harshly with any energy market manipulation by energy firms. "Energy companies need to know that any wrongdoing will be uncovered and dealt with," Davey added. "That's why the regulators are going to carry out annual competition reviews, to make sure the energy market is operating properly. We are going to consult on increasing the sanctions for manipulation of the energy markets, so that they carry criminal penalties for the first time."
No great applause
However, Which? executive director Richard Lloyd said this was something the regulator should have been doing already. "There will be no great applause from the millions of consumers worrying about rising energy costs for the Government committing to make the regulators simply do their job," he said.
Under the DECC proposals, energy companies will be told that they must make switching suppliers faster for consumers – with an ambition to move to switching in 24 hours, rather than the current five weeks, without increasing consumer bills.
As well as energy companies now being required to tell consumers about their cheapest tariff on the front of every bill, energy companies will be required to include a QR (Quick Response) code on energy bills, so that smartphone users can switch to the best deal through a few clicks on a mobile phone.
The government hopes this will make it quicker and easier for those helping vulnerable people to instantly get the information they need to help them find the best deal on the market.
Energy companies should also be more open about how they treat credit balances in consumers' accounts, making every effort to return money to customers with closed accounts. Where that is not possible, Davey said that energy companies should ring-fence that money to help their most vulnerable customers.