The UKís energy market is poised to face a comprehensive investigation by the Competition and Markets Authority (CMA), Ofgem has announced.
Lasting 18 months, the inquiry is expected to scrutinise the profits of the six largest suppliers. The news will be welcomed by the countryís smaller suppliers and consumer groupís alike who have both called for competition levels to rise in the UK energy industry in restore customer confidence in the energy market.
“This will help build consumer trust and confidence in the energy market,” said Ofgem chief executive Dermot Nolan.
The inquiry follows on from remarks made by Ofgem in March which alleged that they intend to refer the industry to the CMA. The regulatorís report queried whether competition within the industry was in a healthy state, which implied a disparity between high and low end providers. The law then necessitates a consultation period, whereby OFGEM liaises with potentially interested parties before bring the case to the CMA.
The key points OFGEM have brought to the CMA for examination include the level of competition between the ëbig sixí and whether consumers who do not switch energy supplier are being extorted.
Earlier this month, Moneyexpert reported that OFGEM had reached an accord with energy companies which simplified the switching process for customers.
Presently, the switching process can take a stiflingly stretched period of time lasting up to 5 weeks, including a 2 week cancellation process. This reality has been cited by a number of consumer groups as a primary factor behind householdís decision to stay with their current provider, even if they are aware that they are not providing them with the best value for their money.
It is hoped that the new switching policy will break down the walls of apprehension that consumers are speculated to experience when considering changing supplier, by making the entire procedure simple and easy.
Under the conditions of the aforementioned agreement, customers will be able to switch energy supplier within three days by the beginning of next year. Anyone seeking to switch will be afforded a 2 week cooling-off period in case they have second thoughts about their decision.
News of the CMAís pending investigation has been welcomed by consumer groups across the UK.
“This is a watershed moment for the broken energy market and millions of people struggling to cope with spiralling bills,” said Richard Lloyd, executive director of the consumer group, Which.
“The investigation must leave no stone unturned in establishing the truth behind energy prices, and while it takes place Ofgem must continue its renewed, tougher approach to protecting consumers. Energy companies must also not wait for the outcome of this inquiry but make urgent changes now to do better by their customers,” he said.
In response, Energy UK, representative of the leading energy companies, said it too welcomed the investigation. “The competition inquiry will allow us to put to bed the toxic debate and shine a light on the progress the industry has already made” said its chief executive Angela Knight.
And she added: “There are now more companies than ever in the market, switching is on the up especially to smaller suppliers and the industry is making it easier than ever for customers to engage with their company.