Microbusinesses need only say the word to switch

Microbusinesses who want to switch water retailer could be able to conclude contracts orally under a change to the Customer Protection Code of Practice (CPCoP) proposed by Clear Business Water and supported by Ofwat.

The regulator is consulting until 8 April on its decision to back Clear, which brought a change proposal (CP-0002) on the following grounds:

• contracts can be concluded orally in other sectors, inclusive of telecoms, electricity, gas, water (Scotland) and insurance contracts;

• retailers selling services across multiple utilities cannot, if the customer is switching water or sewerage services in England, switch all the customer’s utility services at the same time (it takes longer for water because of the written requirements);

• deals don’t go through because of the hassle factor for microbusinesses – only about 51% of Clear’s customers that are required to provide the written acknowledgement or signed Terms and Conditions of Supply end up switching their service;

• the inability to conclude oral contracts is hindering the ability of micro-businesses to effectively engage in the market and switch supplier;

• the changes are positive for retailers without bringing any detriment to customers; and

• it is anti-competitive that retailers who acquired a base of customers at market opening or as a result of retail exit, together with existing suppliers re-negotiating contracts, are permitted to conclude contracts with micro-businesses without having to comply with the requirement for written acknowledgement and/or a signed copy of the Terms and Conditions of Supply, when new entrants are unable to do so when gaining new customers.

Clear suggested amendments of the CPCoP to introduce requirements for retailers where they intend to conclude a contract orally with a micro-business. These include an audio recording of the contract being struck, the retailer putting the terms in writing as a follow up action, and a cooling off period.

Ofwat said it intended, subject to consultation, to implement its proposed decision one week after the date of its decision document. It said it would publish an updated version of the CPCoP at the same time.