The utilities industry could face a ban on door-to-door sales, after a Government report told it to “consider itself on notice”.
The Department for Business, Enterprise and Regulatory Reform (BERR) will call for urgent reforms to the Energy Retail Association code of practice on face-to-face selling, when it publishes its report into the energy market later this week.
In the report, seen by Marketing Week, the BERR Select Committee says switching in the energy sector “may not produce the benefits it should” due to the doorstep selling and telemarketing techniques used by energy companies.
It says: “Moreover, most people who do switch fail to change to the cheapest supplier, and a significant amount actually move onto a more expensive tariff.”
The calls follow Ofgem’s investigation into npower’s selling practices, which started in June this year.
The report says: “Any further significant breach of best practice by any supplier would inevitably lead to calls for this sales technique to be abandoned. The industry must consider itself on notice.
“While direct sales currently provide the most effective means of persuading hard-to-reach consumers to switch supplier, they must be conducted with the utmost propriety.”
Although energy regulator Ofgem is conducting its own market “probe”, BERR will investigate further if it does not come back with an adequate response by September.
A spokesman for USwitch says sales agents are likely to be required to provide more comparative information, including a list of other suppliers. He adds: “While switching is great, there are a large number of switches that don’t benefit the customer. To make sure that happens, it would require a reasonable overhaul.”