Ofgem plans to revive competition in the energy market by allowing companies to send direct mail packs to customers of rival firms to encourage them to switch suppliers could be scuppered by GDPR, in what one senior figure has branded “a farce”.
The proposal – announced in March 2016 – followed an 18-month investigation into the energy market by the Competition & Markets Authority. It proposed that anyone who has been on a standard tariff for three years or more will have their details automatically put on a central database, managed by Ofgem.
The move had sparked warnings that the direct marketing industry could be set back 20 years to the dark days of junk mail.
Last year, Ofgem put plans to build the giant customer database which would have supported the scheme on the back burner after what the regulator described as “issues” during trials. However, GDPR could finally sink it.
According to a report in The Times, lawyers at the “big six” energy companies are advising that they may be in breach of the law if they provide the contact details of customers to rival suppliers. A senior figure at one of the companies told the newspaper: “The situation is absurd. If we have customers who have ticked a box saying they don’t want us, let alone anyone else, to contact them, are we supposed just to hand over their details so that any one of the 76 other supplies can contact them?
“It is easy to see how that is likely to be incompatible with GDPR. We understand the Information Commissioner’s Office has grave concerns about this plan. It’s a farce.”
When approached this week the Information Commissioner’s Office refused to comment on whether the plan complied with the law, saying only that it was “continuing to work with Ofgem to ensure any work complies with data protection laws”.
The senior industry insider added: “We are in an invidious position. If we don’t comply with Ofgem it is a breach of our licence conditions and we could be fined 10% of our turnover but if we breach data protection laws the ICO could fine us 5% of our turnover.”
A spokesman for Ofgem said: “We are working to implement a price cap for poor value default deals by the end of 2018. Alongside this we want to implement the CMA’s database reform to make it much easier for customers who aren’t engaged in the energy market to find out about cheaper deals they can switch to, and make significant savings.
“Ensuring the privacy and protection of customer information on the database is fundamental. Once the database is built Ofgem will ensure that it is compliant with data protection law. To this end we have been liaising with the ICO on the structure, design and implementation of the database remedy.”
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