I pay my gas and electricity bills by monthly direct debit. I was urged to do so by the companies who said it would be convenient for me (as indeed it is), and I would save money as I should get a discount (as indeed I do, though it is a small amount). Although I agreed at the beginning on the size of the instalments, based I think on my consumption record, I have noticed that the companies have been unilaterally raising the size of the instalments, and I see from the statements of accounts that I am always in credit. So, instead of paying quarterly in arrears as I used to do, I now pay in advance and always more than the amount required to cover the amount of energy likely to be used, the companies using my advanced payments. I wonder whether I am really better off, whether I am actually `saving' anything. What do you expert numerate members say?
Ken Frere, who prepares the data for the energy costs tables on the NfCG Web site ( ww.nfcg.org.uk) replies:
If utility companies are scrupulously honest they will base your monthly payments on 1/12th of the future cost of a good estimate of your annual consumption. Not many measure up to all these criteria. If they do, over a year you will owe the supplier only 1/3rd of the amount you would owe if you paid quarterly in arrears. You will pay more frequently and each time you will pay more promptly. You need a discount of at least the level of interest on your current account to be sure of being better off. The supplier reduces its costs of borrowing by about 1 % of your total bill if you pay monthly. It also saves at least as much on its administrative costs, so any discount less than 2% favours the supplier.
Most suppliers offer a discount of around 3%. British Gas claims to give its customers a discount of 11 % for payment by direct debit, depending on level of use, but its quarterly credit tariff is very high compared to other suppliers. However it does offer a discount off your next bill of up to £7.25 per quarter if you pay within ten days, or by standing order, or by quarterly variable direct debit. This is a discount of 10% for someone paying £290 per year, and it leaves you in control.
Most utility companies do not tell you what their estimate of your annual consumption is. This is usually, but not always, because they are not sure. Some companies use phrases such as "based on your last year's bills" and deliberately work towards a situation where they always owe you money. Don't let them get away with it!
NfCG's advice has always been this: make it clear to your supplier that if it wants to keep your custom it must treat your monthly direct debit authority as fixed (by you), not variable (by the supplier). This leaves you in control though, of course, you must fix the amount so that you keep up with your likely annual cost. Keep records of your consumption so that you can tell your supplier how you have calculated what you think the monthly amount should be. It's a learning process for both sides.
A friend who pays her water and sewage bill by monthly direct debit reports that Thames Water reduced her payment without being asked to when it became obvious that it had been set too high in the first place.
Alec Samuels has another objection to today is trading practices
As a consumer, some of the things that I object to are the extras, hidden or not disclosed until a very late stage of a transaction. You wish to buy a theatre ticket. The theatre steers you to a ticket agency. On the telephone, at your expense, you have to listen to advertising and press lots of buttons until you finally speak to a human being. The agency takes a commission from the theatre and then takes a "commission" from you and then adds a "handling charge" so that the tickets end up costing quite a lot more than the face value.
All along the line the seller and the agent are adding extras to the price charged to the customer. By regulation the price must be inclusive of VAT, unless expressly stated otherwise. Likewise the price required for goods and services should be one inclusive price with no extras, hidden or otherwise.
It is time `something was done about it'.
Recently I decided to see if a particular film (the new Charlie's Angels actually - juvenile froth, but I liked it) was on at one of the several cinema screens at a nearby major out-of-town shopping complex, only two or three miles from where I live. I looked up the phone number. There were several, for programme inquiries, actually booking etc. I phoned the programme inquiries number and found that the cinema complex was using a call centre, which could be anywhere in the country, to answer calls at national rate phone charges. If you did not catch the announcement you might well think it was a local call and hang on. Now that would certainly be a hidden charge. Is it becoming a common practice for cinemas and theatres to pass out to call centres the tasks of dealing with inquiries and bookings?
The 2000-2001 European Young Consumer Competition is aimed at pupils attending secondary school and pupils in the last two years of primary school, in all the Member States of the European Union. The theme is "Nutrition - How to Promote a Balanced Diet". The rules, which include full information on the subject matter, prizes to be won (the First European Prize is a surprise trip), entry conditions and registration procedures, are now available from the Internet address below.
1999-2000 was a record year for the Competition, with 1,213 teams taking part, as opposed to 1,160 in 1998-1999 and 222 in 1993-1994, the year of its inception. With an average of 15 participants per team, over 18,000 youngsters have been directly involved in the activity. Since the majority of the teams presented their projects to their entire school, it is in fact hundreds of thousands of young consumers that have been exposed to the Competition. The topic was: "The Consumer in the 21st Century".
Teams from Greece, Germany and Finland received the first, second and third prizes respectively, while a team from Denmark was awarded the young jury prize.
The Greek team won a trip to a surprise destination, which turned out to be Berlin. There, they met the winners of the second prize at a magnificent ceremony organised at the Commission, where the Greek Ambassador and Consul honoured them with their presence. The German, Finnish and Danish teams received 2,000, 1,500 and 1,000 euros respectively.
The Health and Consumer Protection Directorate-General is counting on the help of everyone to ensure that the 2000-2001 competition will be an even greater success. If you would like details they are to be found on the Internet at the following address:
http://europa.eu.int/comm/dgs/health_consumer/events/index/en.html
Comment - just typing the above correctly deserves a prize. This competition seems little known in this country; if you have managed to reach the Internet site, please spread the news around.
That is what the Office of Fair Trading has said about the rules which members of the General Insurance Standards Council have agreed to follow and which set out the minimum standards of behaviour and service which customers can expect. They were explained in an article on page 8 of the last issue of Consumer News.
The GISC asked the OFT to consider the rules and tell them whether they infringed the Chapter 1 prohibition of the Competition Act 1998. John Vickers, the Director General of Fair Trading, said:
"When people buy general insurance they need to have confidence in those selling the products. Self regulation can protect consumers and give this confidence, but it must not be allowed to restrict or distort competition and drive up prices. I am satisfied that GISC's rules are unlikely to have this adverse effect."
"The rules do not impose significant barriers to operating in the general insurance industry, as the requirements and costs of compliance appear to be reasonable, and will not result in an appreciable reduction or distortion in the overall level of competition".
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