This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

CMA, Ofgem and Data Protection Rules

The Competition and Markets Authority (CMA) have been tackling the lack of competition in the market for household utility supplies for some time. They are concerned that many customers have not switched suppliers for some years. Stuck on a basic tariff, they may be paying several hundred pounds a year over the market rates available by shopping around (for example by using price comparison web sites).

They were proposing a price cap for such tariffs, which would of course not be a “market” solution. But now they have settled on a system whereby anyone who has not switched their energy supplier in the last 3 years would be put on a database (managed by Ofgem the utility regulator). Any other supplier would then to able to approach those customers.

As one national newspaper headlined an article on this topic: “Prepare for a tidal wave of cold calls”. The chairman of the CMA said “What they will be bombarded with is offers to save “UP TO £300 A YEAR” which it seems he thinks is something quite different. Lex in the FT even said “This is not a bad idea. Marketing spam has its role in a free market economy”.

Did this announcement hit the shares of the big energy suppliers? Not apparently to any degree. Perhaps they or their investors think that customers who are sent letters urging them to switch will be as apathetic about responding as they mainly are at present. It might of course have a positive impact on the smaller energy suppliers who would have a potentially great marketing database to exploit. So suppliers such as Telecom Plus (trading as the “Utility Warehouse) might benefit. Their share price has risen of late but the interaction is not clear.

Before going further with more comment, I have to declare an interest in that I hold Telecom Plus shares. In addition, I have been a customer of their services for more than 3 years, so yes I presumably will be getting some of the spam. That does not please me at all.

The fact that only addresses will be in the database does not help much. Most people are not ex-directory so it’s easy to look up phone numbers and even obtaining email addresses is now quite easy for most people (look up “e-mail appending services” on the internet).

My real concern is that this drives a coach and horses through the principles of Data Protection legislation. Two of those principles are that personal information that has been disclosed for one purpose should not be used for other purposes, and should certainly not be passed to third parties. When I signed up as a customer of Telecom Plus, I certainly did not disclose my address so that they could pass it on to someone else. I gave them by address so they could supply energy to it, and that is all.

I will be writing to the Information Commissioner about this. Trying to introduce more competition into the supply of energy may be a good thing, but overturning the principles of Data Protection law while doing so is not acceptable.

Roger Lawson

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