OFT turns up heat over code of practice

The gas and electricity industry regulators are facing pressure from the Office of Fair Trading to come up with a tough enforceable code of practice aimed at stamping out dubious sales tactics by rival suppliers in the move towards full domestic competition planned for 1998.

The OFT, the UK's overall competition watchdog, is to bring together the gas watchdog, Ofgas, and its counterpart in the electricity industry, Offer, at a private conference in January to discuss how a binding joint code could be developed. The move follows pressure from the Gas Consumers Council to replace a controversial voluntary code produced by the gas industry, which even some independent suppliers have claimed was too weak.

It comes six weeks before the second large trial of household gas competition begins in the south of England. Some 1.5 million homes will be able to choose an alternative supplier to British Gas for the first time in Dorset, the former county of Avon, Kent and Sussex.

Sue Slipman, director of the Gas Consumers Council (GCC), said she believed Clare Spottiswoode, the gas regulator, had now accepted that Ofgas should play a bigger role in developing and policing an enforceable code of conduct.

Previously Ms Spottiswoode has argued that marketing was a matter for the OFT and local trading standards officers. However Professor Stephen Littlechild, the electricity watchdog, is already believed to be in favour of a binding code of practice, with Offer as the enforcement agency.

Ms Slipman explained: "I think it's now imperative that we have an enforceable code to put the public's mind at rest and stamp out cowboy selling tactics. We need to sort this thing out before the second phase of competition comes in."

Eastern Gas, part of the Hanson group, recently faced criticism from the GCC and Ofgas following complaints about its doorstep marketing tactics in Kent. Some representatives of the company had allegedly told potential customers that British Gas was changing its name to "Eastern".

One independent domestic supplier competing in the trials, Calortex, has so far refused to sign up to a voluntary code of practice on the grounds that it does not go far enough. Another, Amerada Hess, has backed the GCC in pushing for a much tougher legally enforceable code.

Ofgas said the issue depended on the outcome of the OFT conference in the new year. "We're concerned that competition is being introduced fairly and that customers are not being hoodwinked. But you should wait and see what happens at the Office of Fair Trading conference. I'm not saying we won't take a stronger line but we are not ready to do that at the moment."

Ofgas is under attack from big industrial gas customers over a separate industry code of practice which suggests it will take much longer to change from one supplier to another. A copy of the internal code, seen by The Independent, says the process of changing suppliers is likely to take three months.

A spokeswoman for the Energy Intensive Users Group, with representatives including ICI and British Steel, said: "This is just unacceptable. The suppliers have come up with this code of practice because things are in such a mess, but haven't consulted companies about it."

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