Ofgem decided in February 2024 to extend the ban on acquisition-only tariffs (BAT) for a further year, according to Consumer Scotland's response to the regulator's statutory consultation on the future of the ban1. The decision followed the regulator's assessment that there was a residual risk in removing the BAT and the Market Stabilisation Charge (MSC) at the same time1.
The BAT was introduced by Ofgem in April 2022 to complement the MSC in protecting consumers from stability risks during the wholesale price crisis1. The MSC expired on 31 March 20241. Ofgem's minded-to position, set out in the statutory consultation, is to remove the BAT from 1 October 20241. Consumer Scotland states that the proposal to bring forward the BAT removal by six months to 1 October 2024, before the impact of the MSC removal can be fully understood, and to coincide with the projected increase in prices, is not one it can support1.
"The proposal to bring forward the BAT removal by six months to 1 October 2024, before the impact of the MSC removal can be can fully understood, and to coincide with the projected increase in prices, is therefore not one that we can support."
Consumer Scotland states that it does not agree that the BAT should be removed at this time, and that it should be retained for the foreseeable future1. It identifies access, choice and fairness as particularly relevant to the consultation proposal1. It notes that the previous proposal to extend the BAT beyond 31 March 2024 was supported by all suppliers1, and that Ofgem's new common minimum capital requirement from April 2025 should provide some protection against unsustainable pricing and risk taking1.
Consumer Scotland also states that the BAT ensures customers in debt, who may not be able to switch supplier, are able to access a better deal with their existing supplier, and that this is particularly true for households paying by direct debit or standard credit, as they are not protected by the Debt Assignment Protocol1. It adds that falls in the price cap for the typical household over the last two review periods have been a welcome reprieve for consumers, but with prices projected to rise again this winter, it would caution against any premature removal of consumer protections1.
| Item | Detail |
|---|---|
| BAT introduced | April 20221 |
| MSC expiry | 31 March 20241 |
| February 2024 decision | Extend BAT for a further year1 |
| Ofgem minded-to removal date | 1 October 20241 |
| Consumer Scotland position | Retain BAT for the foreseeable future1 |
Why it matters for households
The BAT prevents suppliers from offering their cheapest deals only to new customers, so a household that stays with its existing supplier can access the same products and services as a new customer1. Consumer Scotland frames this under the principles of access, fairness and choice, stating that loyal customers should be able to access the same products and services from their supplier as new customers1. For households in debt, who may not be able to switch, the ban means a better deal can still be available from the existing supplier, particularly for those paying by direct debit or standard credit who are not protected by the Debt Assignment Protocol1. The extension means the protection remains in place for a further year from the February 2024 decision, while the regulator's stated position is to remove it from 1 October 20241. The rules that govern what suppliers must offer are set out in the tariff rules and consumer protections, and the regulator's wider remit is covered in what Ofgem does and what it covers.
What happens next
Ofgem's minded-to position is to remove the BAT from 1 October 20241. Consumer Scotland does not support removal at that time and states that the BAT should be retained for the foreseeable future1. Ofgem's new common minimum capital requirement takes effect from April 20251. No further dated steps are set out in the source.