Ofwat acts on advance business customer billing

Ofwat has confirmed it plans to scrutinise the practice of advanced billing business customers on deemed contracts in the non-household market with a view to launching a consultation later this year.

The regulator explained: “Since market opening we have observed that some retailers have changed the billing periods for some of their customers on deemed contracts. In particular, some customers have been non-voluntarily moved from being billed in arrears prior to market opening to now being billed, at least partially, in advance.

”This is a problem, not only for the customer experience, but also because the Retail Exit Code which Ofwat designed ahead of market opening is based on the principle that customers would be “no worse off” as a result of exit.

Advance billing is not specifically prohibited in the code, but Ofwat said it was “concerned that non-voluntary changes to contract terms could lead to customers being worse off compared to pre-market opening, although this is not explicitly prevented by the current Retail Exit Code”.

It intends to study the nature of the harm, and any potential risks and unintended consequences of changing existing arrangements. “This will allow us, for example, to consider the case for amending the Retail Exit Code if appropriate, so that it captures the full range of price and non-price terms.”