Update: Consumer Switching

3rd Oct 2016

With government and regulators in various sectors looking at making it easier for consumers to switch providers we draw together all the policy initiatives in progress.

There has been continuing debate for a number of years of the need to make it easier for consumers across a range of industries to switch providers. Increased competition, the emergence of challenger brands, improvements in technology and  desire for consumer empowerment have increased calls from politicians, consumer groups and the general public for switching to be made easier.

The focus has tended to be on concerns about the costs of services provided by some, often long established, companies and the difficulties people faced when trying to switch providers to get better deals. But there is evidence that price is not the only factor and that desire for a better customer experience increasingly drives consumer behaviour.

The Institute of Customer Service also has tentative evidence that companies that invest in, and focus on, customer service are the beneficiaries when these markets are opened-up, through switching regulation, to greater competition. The latest UK Customer Satisfaction Index showed that in the banking sector there is a correlation between those organisations that had the highest ratings for customer service and those that were the main beneficiaries of customers switching their current account provider.

The Government updated its switching principles and action plan in May 2016. Below is a summary of switching policy relevant to customer service by sector:


• Updated Principles.  The updated switching principles include that switching should be free to consumers; the process should be quick and easy and at an agreed date; and, consumers should be able to access and copy their consumption or transaction data for their own purposes or to share with others to help them switch.
• Price comparison websites. The Competition and Markets Authority (CMA) is to analyse price comparison websites and consider a common accreditation framework, whether lack of access to free, readily available tariff data is a barrier for innovative or new price comparison websites, and whether price comparison websites in specific sectors should be subject to more rigorous propriety and transparency standards.
• Data access. The government is committed to ensuring, using legislation if necessary, that consumers across the regulated sectors have easy access to the data they need to find the best deals for them, and can authorise third party intermediaries such as price comparison websites to access this data on their behalf using secure application programming interfaces (APIs). (Progress notes under each sector.)
• Consumer landscape consultation. Government has dut to report on its consultation which considered if: there are any problems with consumer advice and representation, and if it could be improved; data on consumer complaints could be made easier to access; more could be done to get consumers their money back when they have suffered a loss; 7 day switching as a minimum in all sectors can be achieved (including mortgages, current accounts, mobile phones, broadband, fixed lines, Pay-TV, Energy).


• Digital Economy Bill. Starting on Committee Stage in the Commons on 11 October this legislation aims to make switching easier and quicker. Government will also work with Ofcom to address the increasing complexity of telecoms contracts, including bundled services.
• Mobile phone locking. There will be a consultation on ending the practice of handset locking for customers outside any initial contract period. This costs consumers £48 a year but serves no practical purpose. It is however a barrier to completion between networks and growth in the SIM-only market. There are currently voluntary commitments.
• Switching guarantee. Government to work towards scheme similar to the Current Account Switching Guarantee.


• Energy Switch Guarantee. Launched in June 2016 by industry, led by Energy UK, covering 70% of the market.
• Better Markets Bill. Announced in the Queens Speech this Bill will increase Ofgem’s powers to coordinate and deliver the change of supplier process for gas and electricity customers and to deliver reliable next day switching.
• Data access. Government is working with industry to enable access to energy data.
• CMA Energy market investigation.  The CMA has completed its investigation and remedies to be implemented by December 2016 include: changes to rules around Price Comparison Websites allowing them to negotiate exclusive tariffs with energy suppliers and to offer discounts funded by the commissions they receive from suppliers; and, creating an Ofgem-controlled database of ‘disengaged customers’ on default tariffs to allow rival suppliers to prompt to switch. The Energy and Climate Change Committee has yet to report on its inquiry into the investigation. 


• Competition. It is not currently possible for most people to switch water providers. However, Ofwat will ensure business and other non-household customers will be able to switch suppliers from 2017. Ofwat also published its cost benefit review for competition for residential customers in September 2016. The government has yet to respond. 


• Data access/Open Banking. The Open Banking Working Group (OBWG) published a report setting out how an open banking standard for application programming interfaces (APIs) could be designed and delivered. The government is now working with industry to implement the recommendations and the CMA proposed that large retail banks should develop and adopt the standard by 2018.
• CMA retail banking market investigation. In addition to Open Banking, the Retail banking market investigation means banks will have to publish ‘service quality’ information, based on surveys on the willingness to recommend providers and their services to friends and family, and send out notifications on certain events e.g. branch closures or increases in charges. The Treasury Committee has an ongoing inquiry in the retail banking market. 

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