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Ofgem reforms criticised for leaving consumers fewer options

Consumers could end up with higher prices and more confusing comparison metrics

Ofgem reforms criticised for leaving consumer less choiceBritain’s big six energy suppliers have hit out at Ofgem just days before it is set to announce the final stage of consultation for its energy Retail Market Review (RMR).

Suppliers expressed concerns over the proposed cap to the number of tariffs they could offer, claiming it could limit choice and innovation. Their concerns were echoed by Ann Robinson, Director of Consumer Policy at uSwitch.com.

“Limiting suppliers to a choice of four tariffs could stifle innovation and lead to a Hobson’s choice for consumers,” she said.

“There is also a danger that prices could converge, leaving little difference or incentive for consumers to shop around. This could damage competition, and ultimately lead to higher prices across the board.”

Ms Robinson goes on to say that the big six energy suppliers are in their right to “lash out” over the flawed reforms that could actually further hurt consumer trust when it comes to the energy market.

“These reforms have to breathe life into the energy market and the key to this it to give consumers a reason to engage, the information they need to engage and the right support and prompts to engage,” she added.

“Instead of creating a confusing and meaningless new comparison metric, Ofgem should ensure that consumers get consistent, simple and straightforward information.”

Ms Robinson goes on to say that after several consultations, there is little evidence that the regulating body is listening.

“While we don’t agree with everything that the suppliers are saying, we do share some grave concerns over the direction in which these reforms are heading. We agree that consumers could end up with higher prices, less choices, more confusion and even less reason to trust the industry. This would be a crying shame.”

Retail Market Review — what is it?

Referred to as the RMR, Ofgem’s proposal to make fundamental changes to the energy market is set to be implemented this summer. Intended to make it easier for consumers to engage in the market, a key change is to limit the number of tariffs providers could offer to four and put an end to confusing two-tier tariffs.

Some suppliers have begun rolling out these changes ahead of the summer months. Last year, British Gas restructured its tariff system, and this month, npower announced simplified tariffs and an end to its two-tier plans.

Energy bills themselves will also get some changes, with suppliers now required to provide a clear and simple summary box of info including your tariff name, payment method and any cancellation fees.

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