Auto-switching platforms work by automatically moving customers to the cheapest available tariff and to use, customers either pay a monthly fee or pay a commission to the firm
Over 20,000 households have been forced to pay more for their energy bills after being moved to a new supplier without their knowledge.
A report submitted to Ofgem by Octopus Energy claims thousands of households were moved by auto-switching services with some unable to revert to their original provider. Auto-switching platforms work by automatically moving customers to the cheapest available energy tariff. To use, customers either pay a monthly fee for the service or pay a commission to the firm by paying a higher rate for their power use than they would pay if they had signed up with a supplier directly.
The report from Octopus Energy accused these firms of taking advantage of falling energy costs and ripping customers off with fees of up to £90 in commission. The supplier said it had received thousands of complaints from customers in March who only discovered they had switched away from Octopus after they received an unexpected bill.
Octopus explained that customers signed up for these schemes years ago but had not heard from the company since. The report noted that the majority of customers believed their “consent had expired” due to the amount of time since These schemes were popular before the energy crisis began in 2021 which saw over 30 energy suppliers go bust.
One of the main groups affected were tenants of properties where the meter had been registered to a switching firm by a previous occupier. In some cases, customers were unable to cancel the switch because the supplier was too “inundated” with calls to respond in time, Octopus’s report said. Based on its share of the energy market, the energy firm estimated that overall some 20,000 households were switched without their knowledge this year.
Alexander Stafford, MP for Rother Valley and member of the Energy Security and Net Zero Committee has called for the auto-switching market to be regulated. He told The Telegraph: “These firms are clearly acting against the wishes of customers who are powerless to stop these firms from ripping them off. With energy debt at the highest level ever, Ofgem cannot continue to stand idly by when the weight of evidence shows they must work fast to protect households.”
Many auto-switching firms paused or ceased their operations when the energy crisis began including Martin Lewis’ MoneySavingExpert’s Cheap Energy Club which turned off its Pick Me A Tariff Every Year function in October 2021. A spokesperson for the company said: “We always required a clicked consent from the user before they were switched to avoid any issues like this. No user could be switched without them accepting it.”
One company which is still operating is Switchcraft. In a statement, the firm accused Octopus Energy’s report of an “inaccurate attack” on the auto-switching market. Andrew Long, chief executive of Switchcraft, commented: “Our mission is to eliminate the loyalty penalty in the energy market and we firmly believe that healthy competition between suppliers is the best way to drive bills down for all of us. In my opinion, Octopus’s inaccurate attack on auto-switching may unfairly undermine competition just when wholesale energy prices are falling and we should all be in the market for a better deal.”
Ofgem responded to the report saying it was “grateful” to the energy firm for bringing attention to the issue and it was now considering the findings. The spokesperson said: “We expect both suppliers and third-party switching services to act in their customers’ best interests, and to make sure they are communicating with them clearly before initiating a switch.
“We have also strengthened the rules that mean when consumers do decide to change their energy supplier it is a smooth process, and they are quickly compensated if it doesn’t go to plan. We’ll continue to work closely with industry and consumer groups and charities to make sure these rules are working to protect consumers in the coming weeks and months.”
