Unfair commercial practices are a problem in all Nordic retail markets for electricity. The fact that no single authority has a complete mandate in this area, makes action more difficult. NordREG believes that coordinated activities between various national authorities are needed, but may be difficult due to different methods, priorities and mandates.
In a report published today, NordREG describes the situation regarding unfair commercial practices in Denmark, Finland, Norway and Sweden. NordREG also compares how responsibility when monitoring compliance with legislation is split between different public bodies and gives examples of remedial actions already taken in each country.
NordREG defines unfair commercial practices as when a customer’s behavior is affected by omitted or misleading information by a seller. Unfair commercial practices may also be practices and contract terms that do not fully comply with the intentions of the national Electricity Act and general consumer protection.
Concrete examples are contract terms that are unfair or changed during the contract period, prepayment that is not refunded, customers that are switched without consent and very short introductory offers that lead into less favorable deals without customers noticing it.
Suppliers that use these methods often target vulnerable customers, for example elderly people, consumers with poor language skills or small businesses not covered by the same legislative protection as household consumers.
The NRAs (National Regulatory Authorities) are the main public bodies that deal with the retail electricity market. However, since other regulation applies, i.e., general contract law, distance selling law and consumer protection law, the NRAs have a shared jurisdiction with other government agencies, or public bodies, on some retail market issues.
This split responsibility can, from a consumer’s perspective, sometimes be seen as ineffective, confusing and unfortunate. Customers may have to contact several public bodies before they can report a complaint or get advice and help. A consequence of this may be that complaints do not reach the right authority and unfair commercial practices are not dealt with.
Here, coordinated activities between various authorities may be necessary. However, they may be difficult to impose due to the different methods, priorities and mandates in the Nordic countries. It is also important that Nordic NRAs continue to share experiences and best practice regarding unfair commercial practices, monitoring and successful remedial actions.
In the report NordREG also lists the following problematic issues, together with possible suggested actions:
- Legislation that regulates the retail market for electricity is divided between the NRA and the consumer authority.
To counter this, coordinated activities between the NRA and the consumer authority are needed. Good communication and information flow between different authorities are essential. Sharing information and experiences between authorities can give a better understanding of complaints and lead to faster complaint resolution. Better information flow between authorities can also ensure that more unfair commercial practices are uncovered.
- Poor legislative protection for microenterprises that to a higher extent have become the target for unfair commercial practices.
Consider legislative changes to increase the protection of microenterprises. Improvements will also come with the implementation of the Electricity Directive.
- Problems connected to telemarketing.
Consider the need for written consent and/or an opt-in/opt-out system.
Read more: Unfair commercial practices in the Nordic retail markets for electricity