Ofgem has said it is minded to remove the ban on acquisition-only tariffs from 1 October 2024, according to Which?1. Such tariffs would be used by energy suppliers to attract new customers or lure switchers from rival firms, and existing customers would not have access to them1. Ofgem has consulted on the change and is due to reach a final decision imminently1.
Which? has written to the regulator alongside E.ON, Octopus, So Energy, Rebel Energy, End Fuel Poverty Coalition, Citizens Advice and Fair by Design, calling for it to reconsider its proposals to lift the ban1. In the letter, the organisations warn of the risk of "a return to a market which discriminates against loyal customers"1. They also raise the potential impact on customers in debt, who may not be able to switch but could also find themselves struggling to access a better deal with their current supplier under the plans1.
The letter highlights the lessons of recent history, when more than 30 suppliers went bust, many after trying to win customers with unsustainably cheap tariffs1. The End Fuel Poverty Coalition said energy bill payers ultimately bore the cost of these collapsed firms through the Supplier of Last Resort programme, which it said added billions to households' standing charges2.
"Our research has shown that consumers overwhelmingly believe cheaper energy deals only available to new customers are unfair - even when they might stand to benefit."
Which? research found that eight in 10 (81%) people would think it was unfair if their supplier was offering cheaper deals to new customers only, and a similar number (78%) said they would think this was unfair even if they would potentially benefit in the short term by signing up to a discounted deal1. Yonder, on behalf of Which?, surveyed a nationally representative sample of 2,090 UK adults between 3 and 4 June 2024; of the respondents, 1,912 were jointly or solely responsible for their household's energy bills1.
| Finding | Share |
|---|---|
| Would think cheaper deals for new customers only unfair | 81% |
| Would think this unfair even if they could benefit short term | 78% |
Why it matters for households
Acquisition-only tariffs are priced to win new customers, and under the proposal existing customers would not be able to take them1. For a household that stays with its supplier, the practical effect described by the coalition is that the cheapest deal on offer may sit out of reach, with bills rising when an initial deal expires, a pattern the letter calls a loyalty penalty1. Households in energy debt are singled out in the letter because they may not be able to switch at all, leaving them unable to reach a better deal with their current supplier under the plans1. The rules that govern what suppliers must offer, and the protections around switching and pricing, sit within the tariff rules set by Ofgem.
What happens next
Ofgem has consulted on removing the ban and is due to reach a final decision imminently, with the proposed start date of 1 October 20241. No final decision had been reported at the time the coalition letter was published1.