Consumers urged to wise up on utility penalty clauses so that fear of early exit fees doesn’t stop them from securing a better, more cost-effective deal.
- Almost all utility companies charge early exit fees, but the majority of consumers are in the dark about these charges.
- Two-thirds of electricity (65%), gas (65%) and broadband (63%) customers either don’t know if they would incur a penalty for leaving their contract early, or are unsure of the amount they would be charged for doing so.
- One in five (17%) utility customers say they have been charged exit fees in the past for at least one utility, with an average termination charge of €180.
- Switcher.ie urges customers to take note of the minimum term, cooling-off period and early exit fees when they are signing up to a contract.
New research out today from independent price comparison and switching service Switcher.ie shows the majority of Irish consumers are still in the dark about early exit penalties on household utility contracts and this could be costing people dearly.
Analysis of exit fees shows that consumers face penalties of up to €300 for leaving a utility contract six months early. However, the real danger for consumers is not so much that they could unwittingly be forced to pay a fee. Instead it’s the fact that these fees, which are largely avoidable, are acting as a fear factor or deterrent, preventing them from actively seeking out better value or more cost-effective deals.
The findings show that the majority of utility customers either don’t know if they would incur a penalty for breaking their contract early, or are unsure of the amount they would be charged. This applies to two-thirds of electricity (65%), gas (65%), home phone (65%) and broadband (63%) customers, and over half of TV (54%), bins/recycling (52%), and mobile phone (51%) customers.
The majority of utility suppliers do charge early exit penalties, but only around one in ten electricity (11%), gas (9%), home phone (11%) and mobile phone customers (11%) know the exact amount they would be charged for cancelling early.
Worryingly, this low level of awareness about early exit penalties appears to be across all the main household utilities, with just 13% of broadband and TV customers and 5% of bins/recycling customers fully in the know about these fees.
Relatively low switching levels in Ireland mean that only one-fifth (17%) of utility customers say they have been charged early exit fees in the past for a utility. But, with the average termination charge amongst these consumers standing at €180, consumers still can’t afford to be complacent, and need to be aware of these fees before signing up to a contract.
Energy suppliers appear to be leading the way in terms of transparency, with these fees displayed clearly on websites, and most charging a flat fee of €50 per fuel for cancelling a contract early. New regulations from the Commission for Energy Regulation also mean that, from October, energy suppliers will have to give consumers 30 days’ notice before they come to the end of their contract. This is a positive move and should help to increase customer awareness of the date from which they are free to switch without being charged an early exit fee.
However, telecoms companies still have a way to go, as it can be difficult to find the information on some providers’ websites. Charges for cancelling telecoms contracts tend to be higher, too, reaching up to €300 for someone who cancels their contract with six months remaining. Unlike most energy deals, broadband, TV and phone plans often come with equipment such as set-top boxes, modems and handsets included, so this could explain the higher charges. It’s also worth noting that early exit fees are waived in certain circumstances.
Utility providers have an important role to play in ensuring that consumers are given clear and simple information about any early exit penalties. At the same time, consumers can help themselves by making sure that they read and understand their utility contracts, so they shouldn’t allow uncertainty about exit penalties to stop them from shopping around. Householders could lose out on hundreds of euro each year if they stick with a supplier or contract that is too expensive and doesn’t meet their needs.
Eoin Clarke, Managing Director of Switcher.ie, said: “With the cost of living already squeezing household finances, consumers need to feel free and able to shop around for better value utility deals. Unfortunately, we’ve already seen that many consumers are being put off switching by the fear of getting tied into a contract – it’s crucial that fear of early exit penalties is not allowed to act as a further deterrent or barrier to getting a better deal.
“It’s vital that consumers have all the information they need to empower them to engage with the market. We’d encourage suppliers to highlight things like the minimum term, discount period and early exit fees as clearly as possible, both when consumers sign-up, as well as on their websites – and we’d urge consumers to take note of these things before entering into a contract. It’s also important for consumers to remember they’ve always got a 14-day cooling-off period with these kinds of contracts.
“If consumers are better-informed about when their minimum term or discounted period ends, they’ll be free to shop around for better deals on their household essentials, in what is a highly competitive market.
“It’s also worth noting that broadband and phone companies are starting to appreciate that customers don’t always want to be tied into a long contract and, as a result, we’re seeing more and more 30-day contracts for the likes of broadband, TV and mobile phone. These can be a great option for people who are on a short-term lease, or want to try out a service before committing to a longer deal, without the fear of high early exit fees hanging over them.”
Early termination fees per energy supplier
Source: Switcher.ie – Data correct as at 20 September 2017. Early exit fees relate to typical gas and electricity 1 year fixed term contracts, and excludes tariffs with prepayment meters and smart thermostat devices.
Early termination fees per broadband provider – cancelling 6 months before contract-end
*Comparison is based on a customer leaving the broadband provider with six months left on their contract. Source: Switcher.ie – Data correct as at 20 September 2017. Table based on providers’ basic entry level home broadband and home phone bundle (where provider also has a phone plan). List of instances where exit fees are waived included in notes below.
Early termination fee per mobile phone provider
Source: Switcher.ie – Data correct as at 20 September, 2017. Early exit fees listed are for contract services only. SIM-only 30-day contracts have no exit fees – customers need to give relevant notice.
For more information, visit Switcher.ie
For further information please contact:
Maeve McLaughlin, Switcher.ie on 01 517 5922/087 133 2526 or email@example.com
Images for use are available on Flickr here.
Notes to editors
Research was carried out in May 2017 for Switcher.ie by Coyne Research, involving 1,000 online interviews with Irish adults aged 18+years. The total sample is representative of the national population in Ireland.
 In response to the question: “To what extent are you aware or not of any penalties you would incur for breaking your contract with each of the following – Electricity, Gas, Home Phone, Mobile Phone, Internet/broadband, TV, Bins/recycling? I would incur a penalty and I know the exact amount of the penalty/ I know I would incur a penalty but I am unsure of the amount/ I do not know if I would incur a penalty/ I would not incur a penalty”
 In response to the question: “Have you ever incurred a penalty for breaking your contract with any of the following: Electricity, Gas, Home Phone, Mobile Phone, Internet/broadband, TV, Bins/recycling? Yes/No”
 In response to the question: “If you have incurred a penalty, how much was the penalty? €1-25/ €26-50/ €51-100/ €101-150/ €151-200/ €201-300.” The average amount was calculated using the midpoint of bands for the amount overcharged.
 For more information visit Switcher.ie’s blog
 Instances where early exit fees are waived:
- Magnet Networks will waive the cancellation fee and give free installation if a customer moves premises and signs up with Magnet Networks at their new address. Fee will also be waived if the new tenant/resident at the premises the customer is cancelling at signs up for service with Magnet Networks.
- Pure Telecom will waive early exit fees when people move house, however the contract isn’t transferred so customers will need to sign a new contract.
- Sky will waive early exit fees when people move house, however the contract isn’t transferred so customers will need to sign a new contract.
- Virgin Media allow customers to move their service to a new premises and keep their current contract.
- Vodafone allow customers to move their service to a new premises without any fees. The existing contract is cancelled and a new 18 month contract applies. In the event that the new premises cannot receive service then Vodafone will release the customer.
 Source: Switcher.ie – Jumping ship: Eight in ten consumers plan to switch this year as Irish households feel the pinch
Switcher.ie launched in January 2013, with the aim of offering consumers free, independent and impartial price comparison and switching services for gas, electricity, home broadband and digital television. Switcher.ie aims to make it easier for Irish households to compare prices, save money on their regular bills, get the best deals on offer and make their hard-earned money go that bit further. Switcher.ie is accredited by the Commission for Energy Regulation as an impartial, accurate and independent supplier of domestic energy price comparisons and is a member of Guaranteed Irish.
Broadband customers can conduct a speed test to find out how fast their broadband is and to identify the best broadband provider for their location.
Switcher.ie is owned by Switcher Limited, a privately funded internet-based business focused on consumer engagement and innovation.
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- Almost eight in ten (78%) Irish consumers plan to switch provider for at least one household essential this year
- Those considering switching electricity suppliers almost doubles since 2015 to 40% – but official switching figures tell a different story
- Almost six in ten of us (59%) have previously thought about switching supplier, but fear factors mean many of us still fail to go ahead
- Loyalty doesn’t pay, but almost a quarter of electricity, home and mobile phone customers (22%) claim to have been with the same supplier for over 10 years
- CER figures show 81% of electricity and 69% of gas customers are on standard tariffs – there’s a €318 difference between typical standard tariffs and the cheapest deals in the market, so Switcher.ie urges consumers to fight apathy and take control
As Irish households continue to battle against the squeeze on their finances, almost eight in ten of us (78%) are planning to switch at least one of our household suppliers this year, according to new research from independent price comparison and switching service, Switcher.ie. But, despite best intentions and substantial savings to be made, fear factors continue to prevent many from actually going ahead – leaving them unable to cut their costs or secure a better deal.
For almost all household services, more people say they intend to switch provider this year than they did in 2015. The findings show that 45% plan to switch motor insurance, compared to 25% in 2015, while one in three (34%) say they plan to switch internet provider, up from 21%. Given our ongoing love affair with our mobiles, a quarter (24%) intend to switch mobile phone network, up 9% on last year.
But despite good intentions, many consumers fail to follow through. While four in ten (40%) say they plan to switch electricity in the next 12 months, almost double the amount that intended to switch in 2015 (22%), the official switching figures tell us a different story.
The Commission for Energy Regulation’s 2016 figures revealed that 14% of Irish people actually switched electricity in 2016 – and so far in 2017, average switches per month are broadly in line with the numbers from last year.
So, while the intent to switch is there, it’s clear that people don’t always go ahead with it. In fact, three in five (59%) people said that they had previously thought about switching utility provider, but didn’t switch in the end.
The research suggests that fear factors are continuing to prevent people from taking control and securing a better deal. As a result, many are being left paying considerably more than they need to. Key concerns for those who didn’t go ahead with switching appear to be: not wanting to get tied into a contract/pay a deposit to start a contract (36%); not being able to tell if a new supplier would save them money (34%); thinking that switching seemed like too much hassle (32%); and being unsure if the new product was same as what was offered by their old supplier (29%).
It’s also clear that consumers need greater reassurance and some facts about switching – one in ten (11%) who didn’t go ahead with a switch were afraid of losing service, and over a third (35%) of consumers are unclear about the fact that all electricity and gas suppliers use the same network to supply household energy.
While some customers will choose to stay with an existing supplier out of genuine loyalty, it is important that those who are unhappy or want a better deal feel they are empowered enough to leave. For most household essentials, Irish customers stick with their providers for 5 years or more, on average. But, incredibly, almost a quarter of electricity, home and mobile phone customers (22%) claim to have been with the same supplier for over 10 years.
According to a recent working paper from the ESRI, the longer a customer has been with a supplier, the less likely they are to switch. And this loyalty simply doesn’t pay, with longstanding customers frequently left languishing on more expensive tariffs or plans than new customers. Taking just one household essential – energy bills – this loyalty could mean customers are up to €318 out of pocket, as anyone who hasn’t switched in the last year will likely be on their supplier’s standard tariff, which will be more expensive than the initial discounted rate.
And, although suppliers do sometimes offer so-called ‘retention deals’ to existing customers to hold onto them, only a small number of consumers (6%) that didn’t switch say this was because they got a better deal from their current provider.
Eoin Clarke, Managing Director of Switcher.ie, said: “Households across Ireland are still feeling the pinch, but switching offers us the chance to take back control, get better value for money and potentially save hundreds of Euro – which could be crucial for anyone struggling with their bills. It only takes a few minutes to compare deals for broadband, energy, TV and phones and, with substantial savings to be made, it’s well worth taking the time.
“Our research shows that awareness of switching and households’ intentions to switch are high, but people are still being held back by fear factors. It is vital that consumers are educated and feel supported enough to be able to shop around and switch freely so that they can make better-informed choices about the suppliers and products that suit their needs and budgets. In this day and age, loyalty doesn’t pay – simply sticking with an existing supplier will frequently land you with a higher bill than if you shopped around.
“Although signing a contract with a new provider can seem daunting, it doesn’t need to be. In general they range from just 12-24 months for the likes of energy, broadband and TV, with SIM-only mobile deals, and some broadband and TV plans, available on 30-day contracts – and there’s a 14-day cooling-off period if you sign up and then change your mind. There’s no need to worry about your electricity or gas being cut off when you switch, either, as all suppliers use the same cables and pipes to supply energy to your home.”
Customers can save up to €318 by switching energy providers, and there are currently savings of over €400 available on some broadband bundles. SIM-only mobile plans available from €6 per month. You can compare deals and make a switch on Switcher.ie.
For more information, visit Switcher.ie
Research was carried out in May 2017 for Switcher.ie by Coyne Research, involving 1,000 online interviews with Irish adults aged 18+years. The total sample is representative of the national population in Ireland.
 In response to the question: “Looking at the following household bills, for which of them – if any – are you likely to switch your provider in the next 12 months? (select all that apply) Electricity, gas, home insurance, motor insurance, health insurance, current account, home phone, mobile phone, internet/broadband, television, bins/recycling, none of the above.”
 In response to the question: “Has there ever been a time in the past when you were thinking of switching provider of a utility but did not switch in the end?”
 In response to the question: “Looking at the following household bills, how long have you been with each of your suppliers? Electricity, gas, home phone, mobile phone, internet/broadband, television, bins/recycling.”
 Source: Commission for Energy Regulation – Electricity and Gas Retail Markets Report Q2 2016
 Source: Switcher.ie – How does Switcher calculate its savings messages?
 Source: Commission for Energy Regulation – 2016 Electricity and Gas Retail Markets Annual Report
 Source: Commission for Energy Regulation – June 2017 Customer Switching Report for the Electricity and Gas Retail Markets
 In response to the question: “The following are a list of reasons that some people have given for not going through with switching a utility provider. Can you please indicate which of the following has stopped you from switching a provider in the past? I did not want to get tied into a contract/ pay a deposit to start the contract, There was no point switching as all suppliers are the same, I could not tell if the product offered by the new supplier was the same as the product offered by my old supplier – comparing products was too difficult, I was frightened of losing my service/getting cut off, I couldn’t tell if a new supplier would save me money, I didn’t know where to get the information in order to switch, Switching seemed like too much hassle.”
 In response to the question: “Do you think that all electricity/gas suppliers use the same network to supply energy to your home?”
 Source: ESRI – Consumer switching intentions for telecoms services: evidence from Ireland
One-third of Irish consumers (30%) claim to have been overcharged for at least one of their household essentials last year, according to new research from independent price comparison and switching service, Switcher.ie. This suggests that Irish households may have been overcharged by millions of euro last year.
The average amount overcharged was €53, and consumers also on average had to wait over five weeks to get their money back again. Home phone customers had to wait an even longer 6.5 weeks to get their money back, while electricity and broadband customers typically had to wait 5 weeks on average.
Household suppliers also varied significantly in their ability to turn a refund around within a week of being alerted to overcharging. Broadband companies were the least responsive, with just one in ten customers (11%) receiving a refund within a week, compared to a quarter (23%) of electricity customers – although some of these delays could be down to refunds being included in the next billing cycle.
Worryingly, the level of overcharging uncovered could just be the tip of the iceberg, with many consumers admitting to not understanding their bills enough to be able to uncover an error, or simply not checking. In fact, 37% of Irish consumers aren’t sure if they were overcharged or not in the last year, while over half of energy (57%), broadband (53%) and mobile phone (51%) customers admit to simply trusting their suppliers to get their bills right.
Many feel they don’t have a choice but to trust their suppliers. A third of energy customers (34%) say there is too much jargon on their bills, with 29% of broadband customers echoing this sentiment.
Overall, 32% of Irish electricity customers say their bills are too complicated, while 27% of electricity and 24% of broadband customers say they can’t find the information they are looking for. Meanwhile. one in three energy customers (34%) can’t identify billing errors. Such is the complexity that six in ten consumers (58%) claim to find at least one household bill difficult to understand.
Energy bills appear to cause the most confusion – one in four (23%) say they find these hard to understand. These findings chime with a recent report from the Commission for Energy Regulation which showed that, of all the complex complaints it received in 2016, 64% of those about electricity suppliers, and 72% about gas suppliers, related to billing issues.
In fact, less than half of energy consumers (49%) even check to see if their bill is correct, with four in ten (38%) just looking at the total amount due. Only 14% use their energy bills to compare deals and switch – a figure which tallies with the overall energy switching levels in the market.
While over-complicated bills leave consumers vulnerable to overpaying, with errors going unnoticed, confusing bills can also be a real barrier to engaging in the market, as consumers are put off comparing offers because they find it too difficult to understand what they’re currently being charged.
Eoin Clarke, Managing Director of Switcher.ie, said: “Households are already paying thousands a year on household essentials, so consumers simply can’t afford to pay extra because of errors, or to wait weeks for a refund because they’ve been overcharged.
“A large percentage of people say their bills are too complicated, which puts them in the vulnerable position of having to trust their suppliers to get it right. Aside from the risk of overcharging, complicated bills are a huge barrier in preventing consumers from engaging in the utility market.This could mean they’re missing out on opportunities to save by changing their usage habits, or by switching to a better deal.
“Energy bills seem to cause consumers the most confusion, with many people saying they only look at the total amount due. This could mean that consumers are missing important information on their bills, including when a discounted tariff ends, or if their bill was estimated. The danger here is that a series of estimated bills could leave households at risk of significant debt if the estimates are out of line with real usage.
“Over the last few years, suppliers have made a real effort to provide their customers with helpful information on how to read their bills, and what the various charges mean for them, so there are great resources out there for anyone that is struggling to understand their bills. If you are one of the many consumers who is confused about items on your household bills, don’t be afraid to ask your supplier as they’ll be more than happy to help you. Getting a handle on the information in your bills will help you to be confident that your bills are correct, allow you to take control of your spending, and help you to save money in the long-run.”
For more information, visit Switcher.ie
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