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Collective energy switch tariffs must be included say Ofgem

switchEnergy suppliers must publicise collective switch tariffs from now on in the Cheapest Tariff Message (CTM), thanks to new Ofgem rulings.

The CTM is already an existing requirement that bills and annual statements should include information about the cheapest tariffs available and how much customers could save by switching to them.

Collective switches are generally organised by a business that gathers a group of people together and use their collective buying power to get a better deal. Usually a customer would have to register to take part in a collective switch before moving suppliers.

However, new rulings from Ofgem have now allowed customers to register for a deal after it has already been secured with the supplier. Therefore a collective switch tariff remains open to customers after they’ve chosen their new supplier and this must be printed on all communications going forward while the tariff in question is available.

Ofgem explains:

“When carried out in a responsible and trustworthy manner, we value collective switches as an innovative way of engaging consumers and facilitating the switching process. Collective switches provide consumers, including vulnerable consumers, with another means of accessing better energy deals, which in turn enables them to save money. Accordingly, we provide them flexibility in the regulatory framework, for example through an exception to the tariff cap.”

While we are all for saving money, Business Juice advise customers to look at these collective switches carefully as they often don’t provide as good a deal as it may seem on first appearances.

These collective switches, rather than bringing customers together just to bulk buy, often collate individual customer data and preferences (such as target price) and when a deal comes to market that matches that target are switched by the organisation. While the customer gets the deal they asked for, the control is actually given over to the switching organisation that has a vested interest (commission payments from suppliers) for switching customers on a regular basis.

Many comparison services also tend to ignore smaller suppliers because it may not be in their business interests – even if they are denying customers better deals. We’d urge consumers to compare energy with a reliable broker instead – it takes seconds, you’ve got nothing to lose and you could achieve a substantially higher saving.

That said, we do welcome Ofgem’s desire to ensure that existing customers should be offered the same deals as new prospects and their push for more transparency in the energy market.

For advice on collective switching or a free instant business energy quote, give Business Juice a call on 0800 051 5770, email us at quote@businessjuice.co.uk or use our contact form.

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