Annual survey reveals only slight improvement since new Ofgem rules to simplify bills
- Electricity and gas bills top the list of documents customers find hardest to understand;
- 58% of bill payers think companies deliberately keep their bills confusing;
- A third of customers tend not to read documents they find hard to understand.
Despite the introduction in the Spring, of new rules from energy regulator Ofgem requiring energy companies to simplify bills, research shows that millions of customers are still struggling to understand their electricity and gas bills.
Ofgem’s ‘clearer information’ rules came into force on 31 March 2014. They are a key element in the energy regulator’s Standards of Conduct for suppliers which are designed to create a simpler, clearer and fairer energy market. The ‘clearer information’ rule states that any information given to customers must be clear, easy to understand and presented in jargon-free language.
However, Gocompare.com’s annual ‘Baffling Bills survey* found that energy bills remain top of the list of documents people find hardest to understand with this year’s results showing only a slight improvement in the clarity of energy bills from last year** (electricity: 36%, gas 33%) and when the survey was first conducted in May 2012*** (electricity:36%, gas 33%).
Document customers find hardest to understand
Home insurance renewal documents
Council tax bill
Car insurance renewal documents
Mobile phone bill
Credit card statement
verly complicated calculations and terminology were cited as the main reasons why people struggled to understand their bills.
Worryingly, a third of those surveyed admitted that they tended not to read bills they find confusing – potentially missing out on important information about their bills from over or under payments; errors or omissions; notice of changes to tariffs or other charges to the availability of a cheaper deal.
Just under a fifth (19%) of those surveyed said they don’t understand most of their bills, while 58% surveyed believe that companies deliberately keep bills unclear.
The use of technical calculations and terminology and, abbreviations contribute to baffling bills. The main reasons given for not understanding bills were:
- Overly complicated calculations (63%)
- Not understanding the terminology used (38%)
- Too much information (28%)
- Language used is confusing or not plain English (26%)
- They include too many abbreviations (17%)
When asked about the meaning of terms and abbreviations commonly found on bills and other documents perhaps unsurprisingly terms most people couldn’t explain were volume correction factor (59%), calorific value (39%), AER (33%), Indemnity (31%), chargeback (30%), kilowatt hours (27%), compound interest (26%), inclusive allowance (18%) and Economy 7 (17%).
Jeremy Cryer, energy spokesperson at Gocompare.com, commented: “Since the end of March 2014, energy firms have been required to provide customers with clearer bills and annual statements. The changes are designed to make energy bills simpler to understand and to make it easier for customers to see how their current deal compares with other available tariffs.
“In addition to showing customers what they have paid and what they owe, the new format bills give customers personalised information on the cheapest tariff their supplier offers. Annual statements will contain useful information on tariffs including discounts, end dates, termination fees and give details on switching suppliers and a summary of the customer’s yearly energy usage.
“The new style bills have now been in force for over six months but, our survey suggests, many customers are still struggling to get to grips with the information they are being sent. However, we urge customers to take a fresh look at their energy bills to make sure they are not missing out on valuable savings.”
To help people make sense of their energy bills and other financial documents, Gocompare.com has produced a range of guides and glossaries which explains commonly used terms and abbreviations, as well providing tips to save money.
Notes to editors:
*On 26 September 2014 an online survey was conducted among 2,002 randomly selected British adults age 18+ who are also Springboard United Kingdom Community members. The margin of error—which measures sampling variability—is +/- 2.2%, 19 times out of 20. The results have been statistically weighted according to the most current data on age, gender, region, and education from the most recent census data, to ensure the sample is representative of the entire adult population of the UK. Discrepancies in or between totals are due to rounding.
**On 3 October 2013, Vision Critical conducted an online survey among 2,001 randomly selected British adults who are Springboard UK panelists. The margin of error—which measures sampling variability—is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.
***Research commissioned by Gocompare.com carried out with 2,002 UK consumers in April 2012 by Vision Critical.
Ofgem’s Simpler, Clearer Fairer rules requirements (31 March 2014):
- Suppliers will be required to give all their customers personalised information on the cheapest tariff they offer for them. This information will appear on each bill and on a range of other customer communications.
- New rules will be in place requiring all information suppliers send to consumers to be simplified, more engaging and personalised to them.
- Suppliers will use a new Tariff Comparison Rate (TCR), in all their communications to provide “at a glance” information to help customers compare tariffs. The TCR will be similar to the APR comparison rate used with credit cards. Ofgem is also requiring suppliers to provide personalised estimates which take account of a customer’s usage to enable them to compare tariffs more accurately when switching.
- A new tariff information label will set out key terms and conditions as well as relevant information to help consumers compare across suppliers.