MPs slam utility companies over bill confusionCommittee says consumers need better information

13 November 2008

gas

If you pay by direct debit, you underpay in the winter and overpay in summer

Gas, electricity and telephone companies aren’t giving consumers the information they need to get best deals, a committee of MPs said today.

According to a report from the House of Commons Public Accounts Committee, a quarter of households who switched electricity supplier ended up paying higher prices, and people switching their home phone service could be having the same problem.

Price controls lifted

Committee chairman Edward Leigh said that the removal of price controls on these services between 2002 and 2006 had failed to deliver enough competition to benefit consumers in the form of lower prices.

Abolishing price controls should put pressure on companies to offer good service at low prices because of the ability of consumers to switch between competitors easily and effectively.

However, according to the report this has not happened in practice. While prices have fallen in some areas of telecommunications, energy prices have risen by 60% since price controls were removed.

Poor and elderly hit hardest

The committee warned that vulnerable people, such as the poor and the elderly, would benefit most from cheaper prices but, conversely, are the most likely to have problems getting the information they need to find the best deal.

Edward Leigh said: ‘Consumers simply do not have the kind of good quality information needed to get the best deals on price and service.

‘It is the poorer and older citizens who are least able and yet would benefit most from switching to a cheaper supplier. They have been exposed to huge increases in gas and electricity prices, far greater than in many other countries.’

Clear information

Which? principal economist John Holmes said: ‘Effective competition depends on the provision of clear and timely information to consumers to allow them to make informed choices.

‘If companies are failing to do this then it is easy to see why so many gas and electricity customers are making the mistake of switching to the wrong supplier – particularly as there are so many different types of tariff available.’

A recent satisfaction survey by Which? found that none of the big six gas and electricity suppliers, who dominate the market in Britain, got a good score for how easy to understand and accurate customers found their bills.

For daily consumer news, subscribe to the here. If you have an older web browser you may need to copy and paste this link into your newsreader: http://www.which.co.uk/feeds/reviews/news.xml . Find out more about RSS in the Which? guide to news feeds.