Ofgem has updated suppliers on the timetable for the creation of the sticky customer database proposed by the Competition and Markets Authority (CMA), following its two-year probe into the energy market.
The regulator says larger suppliers should be ready to transfer the information necessary to start populating the database by April 2018.
In a letter setting out the revised timetable, Ofgem chief executive Dermot Nolan wrote: “Government has been clear that it expects competition to continue after price protection for standard variable tariffs has been introduced.”
“For this reason, we are moving ahead to create a database of customers who have been with their energy supplier on a default tariff for more than three years, in line with the CMA database remedy.”
Implementing the remedy will require suppliers to undertake a “significant data cleanse process” as “the quality of customer data, particularly for those who have not switched suppliers for a while, is currently very low”.
“This is simply unacceptable,” he added. “It means switching takes longer than it should, can lead to failed switches unnecessarily, resulting in consumers perceiving the process as a hassle, when they stand to benefit the most.”
Nolan warned suppliers they must take “all reasonable steps” to ensure the data is accurate and up to date before sharing it with Ofgem. He said the regulator is considering making suppliers automatically pay compensation to customers if their switch goes wrong and this should give suppliers “a clear incentive to improve data quality”.
Larger suppliers with more than 250,000 domestic customers on default tariffs for three years or more as of December 2017 must be ready to transfer the data by April 2018. Ofgem estimates that this information will cover more than 95 per cent of the disengaged customers who will eventually be listed on the database. The regulator expects to issue a similar direction for all other suppliers later in 2018 – most likely over the summer.
The database is being created to enable rival suppliers to contact disengaged customers to offer them better deals than their current supplier. Ofgem began trials of two different iterations of the database in February.
As per the orders of the CMA, suppliers were originally required to be ready to transfer customer data from October 2017 in preparation for a full rollout at the end of April 2018. However, Ofgem delayed the rollout for six months in July whilst it tested a new online switching service called Check Your Energy Deal.
Suppliers both large and small have raised fears that the remedy – dubbed “the spammers’ charter” by critics – could erode trust in the energy industry.