The survey of 7,000 consumers showed that 70% are on the ‘default’ standard variable tariff (SVT) despite an array of cheaper fixed-rate deals.
The CMA said that the energy suppliers are making it seem ‘difficult and complicated’ to change provider, which is deterring millions from switching. There is also a lack of awareness about what deals are available and overly confusing bills.
“There are millions of consumers paying too much for their energy bills – but they don’t have to,” says Roger Witcomb, chairman of the energy market investigation.
“Many customers do not shop around to see if there’s a better deal out there – let alone switch.
“The confusing way energy is measured and billed can make comparing deals understandably daunting. The result is that some energy suppliers know they don’t have to work hard to keep these customers. It’s notable that there are such high levels of complaints about customer service.”
Electricity prices have risen by around 75% and gas prices by around 125% over the last 10 years.
The average household, meanwhile, currently spends around £1,200 on energy each year, with bills accounting for 10% of total expenditure for the UK’s poorest 10% of households.
In order to address widespread overpaying, the CMA has proposed that the energy retail market be based on clear principles that allow the benefits of competition to be gained and promote measures, such as smart meters, that will increase engagement, while specifically targeting disengaged consumers to prompt them to shop around.
Having gained 210,000 signatures for its Fair Energy Prices campaign calling for simpler and fairer energy pricing, Which? said the CMA report was a “damning indictment” of the energy industry.
Which? executive director Richard Lloyd, explains: “This is a damning indictment of how the energy market is failing consumers, with the biggest suppliers taking advantage of millions of households who have also been hit with the costs of government energy policy.
“It’s right to put in place strong extra protection for consumers who don’t, for whatever reason, get a fair and competitive price. We also expect the big suppliers to quickly put in place changes that will bring more transparency and competition in the wholesale energy market.”