OFGEM to Investigate as Scandalous Energy Company Profits Soar Again Coinciding With Rises
The UK’s biggest energy providers are bracing themselves for potentially record fines after regulator Ofgem launched a new comprehensive investigation into the industry.
Ofgem’s decision to begin an inquest into the sector was on the back of price rises from British Gas, Scottish & Southern and ScottishPower which have considerably increased their profit margins.
“Once again, Ofgem has felt the need to intervene and stamp it’s authority on the UK’s energy providers”, said Andrew James, spokesperson for Bad Credit Loans 4 You, a UK finance specialist at sourcing bad credit loans and holiday loans for people suffering from bad credit.
“These companies seem to be continuously pushing the ethical boundaries when it comes to providing a decent service at a fair cost and some customers are struggling with bad credit because of it.”
The regulator discovered that a net profit margin of £65 per customer in September 2010 had now jumped by 38% to £90.
“Whilst Ofgem would expect efficient firms to make a profit, it wants clarity on behalf of consumers that the market is transparent and is working as effectively as possible”, confirmed an Ofgem statement.
People within the industry believe that Ofgem are unlikely to conclude that the market is uncompetitive and will therefore avoid referring it to the Competition Commission.
A similar inquiry was conducted back in 2008 and ended with a similar conclusion.
Officials at Ofgem believe the ‘Big Six’ energy companies, which include EDF, Npower and Eon, have not fully tackled problems it has brought to light in the retail energy market.
Ofgem released a statement confirming they are to “review the effectiveness of the retail energy market to see if further action is necessary to protect consumers.”
Along with plans to “investigate energy companies’ newly available retail accounts and the facts behind the numbers.”
Ofgem’s Chief Executive, Alistair Buchanan, said; “With Britain facing an investment bill of £200 billion over the next 10 years, consumers have the right to expect that the energy retail market is providing them with value for money.”
“Our analysis shows an increase in company margins from £65 to £90 at a time of rising energy prices, which causes Ofgem to rightly ask if companies are playing it straight with consumers.”
Mr Buchanan went on to state; “The energy retail market can only be fully effective if consumers have confidence that the market is transparent and easy to take part in.”
“Greater transparency in the market is good for consumers, investors and for the energy industry as a whole.”
Ofgem has been frustrated that the companies have not moved fast enough to comply with tougher energy misselling rules.
In September this year, Ofgem began an investigation to establish whether four suppliers were complying with new obligations to prevent misselling, setting up a hotline for customers to call if they had concerns.
Ofgem believe there has not been enough progress on new standards of conduct which set the levels of service consumers should expect from suppliers.
“It’s time something was done to stop the companies from breaching rules in the future,” stated Mr James of Bad Credit Loans 4 You.
“Small fines and warnings have been issued previously for different reasons, but people are still struggling with bad credit and have to spend their Christmas money on bills instead of presents.”
According to Consumer Focus, an average of 400,000 consumers across the industry contact their supplier every month to raise a complaint.
Consumer Direct, the government funded advice centre for consumers, receives an average of 14,000 contacts per month from energy consumers seeking advice, many of whom will have problems with bad credit.
If Ofgem finds an Act infringement has occurred, it has the power to impose large financial penalties, of up to 10 per cent of turnover which could total £70m.
In the Consumer Confidence Index Survey 2009, which took into account the opinions of more than 5800 people on their perception of goods and services they received across 45 market sectors, energy companies came rock bottom.
Adam Scorer, of Consumer Focus, which carried out the survey, denied there was a alliance among the suppliers; “What the Ofgem review will not show is that the chief executives of the six major suppliers are huddling around a park bench with a calculator.”
Mr Scorer instead pointed towards the structure of the market to explain why it is difficult for it to remain competitive.
He said it was impossible for a new entrant to challenge the major suppliers' dominance.
Friday's announcement of the inquiry into energy companies has already had a dramatic effect on some parts of the market.
Eon, the German owned energy giant with five million UK customers, will not raise its prices this year.
Npower were rumoured to be on the brink of raising its six million UK customers prices on Friday, but will now decide later this week what action to take.
Bad Credit Loans 4 You helps out people who fear they have been blacklisted because of past poor credit history which could include CCJ’s and defaults, late credit card payments or repossession.
Bad Credit Loans 4 You holds a Consumer Credit Licence issued by the Office of Fair Trading. The company is also covered by the Financial Ombudsman.
Bad Credit Loans 4 You is also registered with the Information Commissioner’s Office for Data Protection.
For help, phone 0800 011 4503 or visit
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Loans 4 You of London Ltd
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Bad Credit Loans 4 You was formed in April 2010, bringing together a team of specialists that together offers over 50 years of expertise to help applicants gain the unsecured loans they need.
From its UK head office in Monks Brook, Loans 4 You operates across Britain, sourcing loans for people with bad credit.
Bad Credit Loans 4 You holds a Consumer Credit Licence issued by the Office of Fair Trading. The company is also covered by the Financial Ombudsman.
Bad Credit Loans 4 You is also registered with the Information Commissioner’s Office for Data Protection.
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