Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



  20. Then it does not end there. So you have been hassled for an hour and a half. Imagine an old person not knowing what to do receiving out of the blue a letter telling them they are no longer with one company. I have had an instance where a man got a bill and he had not been with the company. It is not over, because then you get a letter back from the original supplier, British Gas, saying, "Could you tell us the date of installation of your meter, the serial number of your meter, the reading of your new meter, we also need the following information, blah, blah, blah." I get this damn form to fill in again. It is not my fault at all, but all my time is wasted having to do that. There has got to be a new system whereby people are not put under that sort of pressure or inconvenience. Can you give us some guarantee today that you are going to look into this and it is going to be stopped?
  (Mr McCarthy) I can certainly give you a guarantee that we are already looking into the question of the transfer process to try and make it, as this Committee recommended in relation to gas, quicker and also more reliable. I cannot, I am afraid, give you a guarantee that under any system there will be no mistakes at all.

  21. I read in the Report somewhere where it said that the number of complaints that you got could well be just the tip of the iceberg. That does not surprise me at all because if people are being pushed from pillar to post they get totally fed up, frankly, and they cannot be bothered to complain. At the end of the day it is so much hassle they just let it go by. I do not think you, frankly, as an organisation have taken the issue of transfer seriously enough, whether it be the length of time it takes to transfer or the results of wrong transfer, etcetera. So why do you not routinely monitor the transfer system because you do not do that, do you?
  (Mr McCarthy) We do monitor the transfer system.

  22. But you do not routinely do it, do you?
  (Mr McCarthy) I believe that we monitor it because what we do have is the percentage of returns which can be for a variety of reasons, including the returns which are caused by people changing their minds. The thing that we can correctly monitor are complaints and I completely agree with you that we do not regard the level of complaints as being identical with the level of dissatisfaction and I also agree and accept entirely that dissatisfaction is greater than the number of complaints, but we monitor that and we are also doing a study which is a detailed study of the transfer process.

  23. I want to move on to another topic on page 27, paragraph 3.8. When I read this I saw myself exactly in this position, that I have never transferred to another supplier, either gas or electricity, firstly, because I was never certain that if I did I was going to be any better off and, secondly, I thought it is like a car service, if you put your car in for a service it comes back with a rattle usually which it did not have when it went in. Transferring gave the same impression. I am alright as it is at the moment so if I change it might be worse. You have not done a great deal to persuade people like me why I should transfer. You have not advertised in the press. You have gone to consumer groups which very few people contact, you have gone to agencies. You have never had a press campaign telling me why I should transfer, or how I am going to be better off. I do not want to be spoon-fed but it would have been nice for you to have done that. Why have you not used the press? Is it too expensive?
  (Mr McCarthy) We originally when competition was being introduced did advertise. We have used the press extensively. I checked before coming here the number of articles which were about switching and the advantages of switching which had directly used the Ofgem price information that had been carried in the press.

  24. You have not been very successful because only three per cent of the population say that they know anything about it because of yourselves. If I was in your position and only three per cent knew I would think that I had bloody failed here.
  (Mr McCarthy) Sorry, if I can just complete the answer. In the month of January there were 12 articles in the press, none of which I am very glad to say we paid for, all of which gave detailed information about how to switch, all of which were based on Ofgem's ten points on switching and were based on our price information. Those 12 articles covered both broadsheet and popular press. I am absolutely indifferent as to whether people say that they have learned about the prospect of switching from Ofgem or elsewhere, but I am very pleased that a very large number of people know about switching. I think that the actual record over a period of one and a half years in electricity, between two and four years in gas, actually stands comparison with any utility in Britain or with electricity in any other country. I do not think we have actually done badly.
  (Mr Reid) May I add a comment there?


  25. A very quick one.
  (Mr Reid) Thank you. If this issue continues for you then I would be delighted, on behalf of energywatch, to take it up. Secondly, energywatch, which is a newly created institution just since November of last year, sees its role actively to publicise itself so that it can, on your behalf, or on the consumer's behalf, be known for approaches and take up issues on their behalf with the companies. We see a very, very major requirement upon us to be seen by and known to consumers, precisely the point you are making.

Mr Steinberg

  26. I shall keep you in mind.
  (Mr Reid) Thank you very much. Do so.

  Chairman: Thank you very much. Mr Nigel Griffiths.

Mr Griffiths

  27. Page 30 says that 88 per cent of people who have switched have found it easy to switch. Mr Steinberg has given an example that it is even easier for some, and indeed somebody did visit my office two weeks ago to check a meter and had my very experienced office manager sign for it, only to be chased up the street later on since she appeared to have signed for a new supplier. I do not think you will find a Member of Parliament who feels that Ofgem or its predecessor has been in any way effective in dealing with this. What is your defence?
  (Mr McCarthy) I am trying to make sure that I understand the accusation.

  28. Mis-selling in this case, yes.
  (Mr McCarthy) I think I go back to my earlier answer. Ofgas at the very early stages in the introduction of competition in gas identified a number of problems which had been initially flagged up by the then Gas Consumers' Council and from the very beginning of electricity competition we incorporated them. We have extended those in a number of ways and the NAO Report recognises that. We have taken action against two companies in the last year to make them change their sales techniques, so we have acted.

  29. Who are those two companies?
  (Mr McCarthy) The two companies were London in December 1999 and Npower most recently this year.

  30. Have you received many complaints about switching problems?
  (Mr McCarthy) On direct selling we receive them at the rate of 0.5 per 1,000 complaints[4]. I am sorry, I would have to consult my notes to find the exact number.

  (Mr Neilson) 0.5 complaints per 1,000 customers who transfer.

  31. So what is that?
  (Mr Neilson) It is 231 complaints in December.

  32. 231 in last December alone?
  (Mr Neilson) Yes.

  33. About transferring?
  (Mr McCarthy) Against a background of which there are transfers going on in electricity at a rate of 113,000 each week.

  34. How many companies were involved in these complaints? I know you have this on your web page, but that is the problem with web pages for customers.
  (Mr McCarthy) They would be spread across all companies I would expect.

  35. So who are the worst offenders, the two you have named?
  (Mr McCarthy) At the time they were the worst offenders, yes.

  36. And who are now, or who were in December? While you are looking, can you tell us what was the maximum penalty you imposed on those two?
  (Mr McCarthy) The answer is because the legal powers to impose financial penalties have not yet been introduced by the Government, all that I can do in terms of financial penalties at the moment is name and shame and introduce licence conditions on their behaviour.

  37. And you have done that, have you?
  (Mr McCarthy) Yes.

  38. In how many cases?
  (Mr McCarthy) We have done it in terms of mis-selling in those two cases. We have had informal contact with other companies which has resulted in their changing behaviour. We have also taken action of a different nature in relation to mistakes on billing.

  39. I am aware that there is an element of fraud, forgery of signatures, in some of the mis-selling. I was not aware that you were getting so many complaints as recently as the end of last year. Why do you not impose a standard transfer form? In other words, a procedure where when people transfer they are sent a form, whether it is telephone sales or whatever, that they then have to sign and log and that has no small print.
  (Mr McCarthy) Because, for example, I am not persuaded that the action that would be taken to take action in that way, which would have some inhibiting effect in relation to, for example, telephone sales or internet sales, is balanced by the advantage that it would have in reducing the problems that you identify.

4   Note by Witness: On direct selling we receive them at the rate of 0.5 per 1,000 transfers, not complaints. Back

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