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More than one in five customers who took part in a collective switching trial run by Ofgem changed their energy deal, the regulator has revealed.
It said the figure is eight times higher than the switching rate of similar customers in the trial who received no information
The trial ran from February to April and involved 50,000 disengaged customers from a “large supplier” who had been on a standard variable tariff for three years or more. The company was unnamed at the time but Ofgem has since confirmed it to be Scottish Power.
Customers received letters showing how much they could save by moving to an Eon collective switch tariff negotiated by the price comparison service, Energyhelpline.
They were not required to enter details of their existing tariff, unlike other collective switches, making it easier to take part, Ofgem said.
When customers contacted Energyhelpline online or by phone they also received information about potential savings from other deals across the market.
Ofgem required the comparison company to choose a supplier that had a customer service rating of a least three out of five stars in its ranking system, when customers selected the collective switch tariff.
In total 22.4 per cent of customers in the trial switched, with those switching to a new tariff achieving average savings of £300.
Of these, approximately 50 per cent chose the collective switch tariff.
Just under a quarter moved to other cheaper deals through Energyhelpline, and the remainder chose another tariff without using the price comparison service. Almost a quarter of customers who switched either to the collective switch tariff or to other deals listed by Energyhelpline were over 75-years-old.
The 22.4 per cent overall switching rate in the trial compares to the 2.6 per cent switching rate in the “trial control group” of similarly disengaged customers who did not receive any information about the collective switch offer.
Energy UK said the trial showed being able to switch with ease and confidence is important to customers.
A spokesperson added: “The regulator must also ensure that supplier business models are sustainable over the long term to help build trust.”
Rob Salter-Church, Ofgem’s interim executive director for consumers and markets, said: “Many customers on poor value default deals rarely switch because they think it’s too much hassle, or might not realise how much they can save.
“The results of this trial demonstrate that offering a simplified collective switch and providing personalised savings can be a big help in giving these customers the confidence and reassurance they need to start a switch.
“It’s particularly welcome to see many of those who typically are less likely to switch, such as older people, taking advantage of the savings available during the trial.”
He added: “Ofgem will work with suppliers on a larger collective switch trial as the evidence so far suggests that it could help many disengaged customers get a better deal. We will also protect those who don’t switch from being overcharged by putting in place a price cap.”
Following the success of this trial Ofgem says it is planning a larger collective switching trial involving more than 200,000 customers later this autumn.
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