It will be “really hard” for the government to take away the price cap now it has been introduced, Ombudsman Service’s director of regulatory affairs has warned.
At the Utility Week Customer Summit in London this afternoon (22 January) Ed Dodman gave his views as part of a panel discussion concerning the future of the price cap.
As the law stands the cap will be reviewed annually until 2023 when it will cease to apply.
The panel discussed the benefits the cap has brought in, such as savings for customers, as well as the negative aspects for suppliers such as the increased pressure on their finances.
Dodman added that both the positive and negative results of the cap happen at different times.
He said: “The thing with the price cap is you get an instantaneous benefit on price for some customers.
“The other effects are more nuanced and delayed. So actually, making that trade-off is very difficult, especially when the benefits and dis-benefits are happening at different times.”
Dodman later added that if the cap squeezes suppliers financially, less money is available for them to help vulnerable customers.
Also speaking during the discussion was Ofgem’s director of conduct and enforcement, Anthony Pygram, who said large suppliers will hopefully soon see an end to the “pain phase” caused by the cap.
Pygram was responding to a question during a panel discussion about how the cap has helped big suppliers with vulnerable legacy customer bases continue to invest in better services for those customers.
He said: “It is probably the larger incumbent players who have got the bigger customer bases but also the bigger cost bases. And that probably means you’re having to make savings and having to change the way you do business.
“It’s about providing a quality service at a reasonable price. We think the price that we set allows all suppliers to do that. I suspect from what I see when I talk to suppliers, some are going through an initial sort of pain phase.
“And that pain will hopefully come to an end soon and be in a position where you’ve got your offering where you can start driving forward – on the same basis as suppliers who started off with a very different cost base.”
The Ofgem director was also asked about the future of the cap.
Pygram responded by saying the Conservative manifesto is not very clear on the next steps regarding the price cap but added it was hard to envisage removing the cap and having no protections for anyone.