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Energy suppliers will cut the time it takes to switch to 17 days by the end of the year, Ofgem announced on Monday.
The regulator has also published proposals to replace IT systems developed in the 1990s, in order to bring in next-day switching by the end of 2018.
Switching supplier currently takes around five weeks, including a statutory 14-day cooling off period.
Dermot Nolan, chief executive at Ofgem, said: “Consumers can change their bank in seven days, their mobile phone in just a couple, but have to wait significantly longer to switch their energy supplier. We know that consumers want a reliable and efficient switching process, and that concerns about it going wrong can put them off shopping around for a better deal. So following the steps we have taken steps to make the market simpler, clearer, fairer, we are now leading a programme which will deliver faster, more reliable switching.”
Industry and consumer groups welcomed the move.
First Utility has been campaigning for faster switching since September. As one of the largest independent suppliers in the UK, it has benefitted from a recent wave of switches away from the big six.
Ed Kamm, chief customer officer at First Utility, said: “After 16 years with the same process, the actions of a challenger provider providing fresh thinking have been able to introduce meaningful change.”
He added: “It’s important that we view this as a stepping stone rather than an end.”
Ecotricity founder Dale Vince said the goal of 24-hour switching could conflict with stricter rules on checking customer details that come in this September.
Vince said: “The new regulation will require energy suppliers to take all reasonable steps to ensure that switching details are accurate and this may be a challenge within 3 days or not even possible in 24 hours – so conversely there may be an increase in what are known as erroneous transfers.
“One answer may be to simply move the 14 day cooling off period that currently applies before a switch can proceed, so that the 14 day cooling off period applies after the switch has taken place.”
Moneysupermarket.com agreed. Clare Francis, editor-in-chief, said: “MoneySuperMarket would like to see energy switching happen within 7 working days as it does with bank accounts, and there should then be a cooling off period where customers can change their mind. This is what happens in other areas such as insurance: you can change your mind after you have moved to a new provider.”
Which? executive director Richard Lloyd said: “Suppliers should introduce 24 hour switching as quickly as possible, under close scrutiny from Ofgem so that the cost to consumers of the new system does not spiral. It will also be essential that suppliers do more to introduce simple pricing so consumers can easily see the best deal for them before they switch.
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