Friday, 18 March 2011

New call for watchdog to ban 'rollover' energy contracts

Energy watchdog Ofgem is facing renewed pressure to ban rollover contracts for small firms. 

Rollover contracts mean that firms are automatically locked into a new,  more costly deal after their initial contract has ended if they fail to give notice in time to their supplier.

Financial Mail has highlighted how small firms are being caught out by such deals, which force them to pay significantly more for their energy, and has campaigned for Ofgem to ban them.

Since January, suppliers have been limited to rolling over the smallest  firms for a maximum of one year. But firms that employ ten or more staff  can be rolled over for longer.

Last week, Ofcom announced proposals to ban rollover deals on landline phone contracts for both business and residential customers. It  expressed concern that such contracts 'make it harder for customers to  switch providers and reduce the benefits of competitive choice'.

Figures published last week by online energy adviser show small and medium-sized firms pay nearly £2bn more on electricity  than they need to. Just seven per cent changed supplier in 2010.

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