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CMA Findings – The missing link, engagement

The trickle of initial findings from the CMA, the Competitions and Markets Authority, and their investigation into the energy market has thrown up a number of interesting debating points, not all of which were entirely expected by those calling for the investigation.CMA logo

We’ve already talked about the alternative view of the CMA’s headline finding that if customers don’t engage in the energy market they don’t benefit from better deals.

Whilst we’ve said elsewhere that this is unlikely to be news for anyone with any experience of buying a product or service, the findings by the CMA of the extent of this customer inertia is eye opening.

According to the CMA, around 40% of British Gas customers have been with the company for more than 10 years a record that is at the lower end of the rest of the Big 6, with some having 50% of their portfolio made up of apathetic customers and one supplier have a proportion of a staggering 60%-70%!

That is customers who simply sit and let the market continue without them.

As the CMA themselves said of such customers:

“[They are ] more likely… to think switching is a hassle, that there are no real differences between suppliers and that something may go wrong if they switch”.

Whether or not suppliers are encouraging this apathy there can be no doubt that this level of disengagement is the root cause of paying too much for your energy.

Indeed chief executive of Energy UK, the supplier trade body, Lawrence Slade hit the nail on the head when he said:

“I cannot emphasise enough how important it is for customers to shop around and find the best deal for them.”

Ed Davey, Secretary of State for Energy and Climate Change laid it on the line saying:

“When it comes to switching, the power is in people’s hands to get a better deal and save.

“We’ve [the coalition government] reformed the market so that there are more suppliers, more competition, and a much faster and simpler process to switch. That means millions …. can switch supplier and save … today.”

That’s one politician’s claim you really can believe.