I nearly called this blog “and the cowboys came over the hill” but decided that the actual title would be more use for small businesses in the same situation as a friend of mine.
It seems that new businesses get added to a database somewhere which is then accessible to what can only be called cowboy companies who ring up and try to get you to sign up for cheaper power. While the idea of cheaper power sounds attractive there are some things that you need to be aware of as a new small business.
Each of these companies (who have official sounding names like “Meter Registration Unit”) will all tell you that they are not brokers and that all the others are “cowboys” while at the same time neglecting to tell you that they only want you to sign up to the power company that they represent. They may also tell you they are part of a government scheme, quote misleading prices, bamboozle you with comments about deemed rates and generally trick the unwary. You may also be told that you have 14 days “cool-off” period where as in actual fact, if you verbally agree to anything with them you are not covered by the Distance Selling Regulations as the transaction is considered to be a B2B one and not a B2C.
The experience of my friend has led me to look into this some more and I have even spoken to Npower (one of those recommended by the brokers) who tell me that they get a lot of business from this system although they know that as it is not regulated there are some shady dealings going on and if you agree to change to them over the phone and then say that you don’t want to move they will refer it to their complaints team. I have no doubt that other firms also react in the same way and this is in no way any criticism of Npower.
And the best thing is… if you are lucky enough to get on this database you can expect maybe 200+ calls over a couple of days and multiple calls from the same company as happened this week to a small business that I know. Al I can suggest is that if you manage to get onto the database just tell them that you are not interested, contact your existing power supplier (assuming that you want to stay with the same company) and sign up for a contracted rate. You can also sign up for the Telephone Preference Service (something I would recommend everyone does, both at work and at home, to try and stop cold calls) and then log the details of any calls received and report them.
If you would like to read up more about these scams then a quick Google search will give any new small business plenty of warning – a couple of suggested searches are Meter Registration Service and energy brokers scam which suggests that this has been going on for several years without any action being taken by the authorities.
Please note that this blog posting isn’t saying that all energy brokers are cowboys, just that there are some out there who prey on new small businesses at a time when they are vunerable to scams (it is a busy time when you have just set up a new business). Personally, if I wanted to check my energy costs I would probably contact the various suppliers myself and get the details of the best prices but you may feel more comfortable having someone else do this for you (just remember that they will be paid a commission or will charge you a fee for doing this and if they are paid a commission you need to ask them how independent they are and how many utility companies they represent). There is also hope in this article that says that Ofgem are looking into forcing energy brokers to admit when they are being paid commission. They may also be compelled to explain key terms and conditions and make it clear that all contracts are legally binding – even those set up over the phone.
And finally, it seems that if you are a small business and complain to the firm you have been tricked into agreeing to move to you can complain to the Energy Ombudsman once you have complained and reached a deadlock with the power company. This page has more details about this at the bottom of the page
Hear, hear, sadly your friend’s story is not unique and everything you say is spot on for what is I’m afraid a hazard of moving premises, it seems that just about everyone you use to help you – the phone company, the removal company, the postie will want you for your data as much as your business. There is nothing wrong in that per se but it would be good to know they were a little more selective in their sharing.
Having said that here are some practical tips that may help:
1) When you move into a new premise you are automatically placed on a deemed contract, that means you are FREE to change supplier at anytime no mater what your supplier or nuisance caller says.
2) You are not only free to move but you’re also free to choose from any supplier, there are many out there some specialise in business, others are household names, some major on green energy and technology and some just aim for the lowest price possible.
3) You can shop around for energy long before you actually move into your premise, allowing you to get a good idea of the options available. You can even switch before you move in as long as you have your tenancy agreement proving your right to do so!
4) Business energy rates are not like domestic ones, they change constantly, that may sound like a nightmare but it isn’t…it’s the opportunity to strike a deal, everyday and sometimes within the day prices will move and a deal will be available.
5) Be aware though, once your supplier calls you and makes a contract offer you need to act quickly to prevent your refusal (and you should refuse) ending in penalty rates…it sounds unfair because it is…so my advice is move quickly to find the supplier you want to go to with the deal that suits you best and tell them you’re ready to move.
6) Even if you are not moving you can still strike a great deal. Get your contract end date, write it down, put it in your calendar, do whatever it is that will remind you to act and when it’s less than 6 months away shop around, you can contract way in advance of your contract end date. If you did that today with the current falling energy prices you would be sitting happily over the months to come knowing the financial savings and security you’ve just banked for your business.
7) Finally the great irony of energy switching… domestic customers know they can and do do it in droves while making minimal savings after the first switch, business customers don’t know they can do it and miss out on huge savings time and time again. Don’t be beaten by the bullies, take your stand and switch on your terms.
And if this all sounds like a headache that you don’t need use a broker to do it all for you, make sure they represent all suppliers and always check out their website to see if you get the right trusting feeling from them.
I hope this helps.
James Constant, uSwitchforBusiness
All valid points James, and something that new businesses should be aware of.
An update on this is that the original supplier objected (as they had been asked to do) but eventually the firm taking over the supply (NPower) sneaked the takeover through by changing the way they were requesting the change.
This has meant that the account was effectively “stolen” and has resulted in a complaint going in to NPower’s executive complaints team on the advice of the Ombudsman and also the local MP getting involved as this is not the first time this has happened to people in his consituency. My friend (and I) have listened to the recording of the phone call that mysteriously doesn’t include any of the conversation about sorting rates for all suppliers by the cheapest and that the current provider doesn’t even feature in the top 10 despite being 2p a unit cheaper, neither does it include being told that there was a 14 day cooling off period (something that we now know is not true for business customers).
I am afraid that my advice is still – either do it yourself or contact a broker that you choose – if you get a phone call out of the blue (and my friend ended up getting over 300 calls from brokers offering to “save her money on electrcity” (and amusingly even some asking for the gas meter number as she was on a deemed rate for gas as well – despite there being no gas at the premisese) the best thing to do is simply say “I am not interested” and hang up.
The bit that gets me is that all of these firms with-held their phone number, I’m fast coming to the conclusion that it should be illegal for businesses to with-hold their phone numbers.
It may be a little too late, but we’d like to offer to switch your friend’s business energy supply for her – we’ll donate our commission for the sale to a charity of her choice too.
James
I’ll let her know James, thank you for the offer.
I think all she wants to do is go back to the original supplier which is what she has told Ofgen and the MP.
I don’t know James but feel that his offer and comments are fair – because of this I am happy to include a link here to his energy brokers website for anyone that is interested.
And today… there was a call from yet another energy broker who didn’t seem to believe that a contract had been signed. At this point the call was reported to the TPS as the number called has been TPS registered since November last year.
Oh, and the MP got involved in my friend’s problem and got it sorted, so if you are having the same problem it might be worth mentioning the problem to your MP and asking them if they are aware of the impact that this is having to small businesses in their area.