The pressure is telling already.
With a threat from Ed Davey, Secretary of State for energy and climate change, that a non-profit switching site was “actually something we’re looking at” business models across the UK are suddenly being defended, vehemently.
On the eve of an election year and with a government desperately in need of a populist vote winner the price comparison sites are probably justified in being worried as to what the future holds.
Even the regulator, Ofgem have got in the act, insisting:
“We are proposing that ‘whole of market’ price comparisons should be even easier to obtain”
But oddly they caveated this bold statement with the get-out clause:
“But not that people [the price comparison websites] have to make them available at all times to all consumers as this would ruin their business model.”
The Big 6 energy suppliers would be forgiven for thinking it funny that they don’t get the same empathy from the regulator!
Caroline Flint, Shadow Energy Secretary, backed Ed Davey’s move for a non-profit switching site, saying:
“This is the latest example of an energy market that is failing consumers.
“People have a right to expect price comparison websites to provide accurate and complete information without fear or favour. If tariffs are being excluded simply because the website does not receive commission if someone switches to them, that is misleading for consumers and undermines the whole point of comparing prices.”
Given the political clamour for a significant distortion to the profitable price comparison sector, the “Big 5” comparison sites, Moneysupermarket, uSwitch, Confused, Gocompare and Compare the Market are suddenly facing similar pressures to those of the better known “Big 6” energy suppliers.
The Big Deal, the switching site that broke the news said:
“The price comparison sites are worth hundreds of millions of pounds, make huge profits and, with over five million people switching a year, are a major part of the energy market. Yet there is no transparency to how they make their money or how much they charge.”
Justifying the policy?
The responses have been varied from the participants with signs that businesses, ostensibly doing the same thing, are lining up to cut each other’s business model down as well as defending their own.
Self styled consumer champion uSwitch responded to the accusations of intentionally hiding unprofitable deals saying:
“Customers have the clear option to compare plans across the whole energy market on our site. We do not pre-select a default answer when giving them this choice, nor do we in any way influence what they should select.”
A statement that suggests the practice does exist, but that the consumer can override its effects in order to see an eventual “whole market” comparison.
Similarly price comparison behemoth Money Supermarket claimed:
“The option for customers to filter results is displayed clearly and prominently, and is necessary as some providers choose not to list products on comparison websites.”
In contrast, Go Compare was accused by the Guardian of automatically filtering out those deals for which they do not have a commercial agreement. The company confirmed that they did not operate a “buy now” option, but claimed that they made it clear that other tariffs were available albeit not through themselves.
Confused defended their stance by claiming:
“Some suppliers do not make certain tariffs available through comparison sites, so we give customers the option to exclude these from the results”
But it’s not only the visible big players that are taking stock.
Underpinning the proliferation of ‘price comparison’ websites is the wholesale provision of energy comparison platforms. Key players in this market include Energylinx, uSwitch and UKPower who provide their platforms to third parties to enable them to offer comparison services to customers.
One of their number, Energylinx, have hit back against services like those offered by the Big Deal claiming they offer:
“A generic headline grabbing figure from a tariff that they cannot actually sign up to even from the supplier direct”
In addition Energylinx have defended the reasons for hiding tariffs as driven by technical reasons:
“Because they [the customer] live in an IGT (Independent Gas Transmission [sic])”
Economic reasons:
“[If the customer has] a prepayment meter and it would cost £150 to change to a credit meter”
The personal:
“[If the customer] do not want to manage their account online or [have had] a bad experience with a supplier”
But in our opinion none of these elements preclude the provision of a whole market comparison.
Once a customer’s details are input, if a supplier is unable to offer a service for example to an IGT, then this tariff would genuinely not be available for a customer! There would be no such tariff to hide!
Anything else appears simply to be auto-selection to the benefit of no one but the service provider.
Similarly the ‘personal’ and ‘economic’ factors quoted are those that the customer can and should decide for himself or herself having been provided with a “whole market comparison”.
There should be no need to hide these unilaterally and thereby assume the customer would have wanted this to be the case.
If the customer makes a direct request for the exclusion of a, b and c supplier on whatever basis they choose then this is their legitimate right. It is not for price comparison websites to ‘assume’ this responsibility for them.
Energlinx defended their model as:
“[Having] commercial arrangements with 30 of the 31 domestic energy suppliers in the market but not for every customer in every circumstance”.
In our opinion having the commercial relationships is one thing, providing the transparency of whole market pricing is another entirely, as a result hiding those that are deemed disadvantageous to the business or even the customer can never be whole market comparison.
Not free
Energylinx in their statement went on to remind everybody that:
“Comparison sites are NOT free”.
And that surely is the key, comparison sites, brokers, third party intermediaries are not free; they are businesses and charge for their services one way or another. That is a fact most customers accept, however what is not and never can be acceptable is that in return for that payment comparison sites are not being honest, transparent and fair in their dealings.
To their credit Energylinx highlight that they have:
“Been advocating transparency in the market for many years by encouraging the inclusion of commission fees on platforms and indeed the suggestion was included in the recent submission response to the Ofgem consultation on TPIs”.
Energylinx, as have Business Juice, have insisted that:
“Transparency should be extended not only to TPI’s but the suppliers and collective switch schemes as well”
This is welcome.
However, the only ‘winners’ in this unseemly episode would appear to be the Big 6, and then only because for once, all the ills of the energy market are not being laid at their doors!
That said in truth there are no winners, yet again consumers are being left high and dry in an impossible situation of trying to find out who they can trust.
As a consequence it is clear that Ofgem’s requirement for sites to:
“Offer users the option to see all tariffs, not just the firms with which the website can manage the customer’s switch”
are being subjectively managed by price comparison websites with pre-selection of deals above and beyond those natural filters that would occur from a customer’s particular circumstance e.g. giving a gas only customer, electricity prices!
As Energylinx say:
“There is no such thing as a free lunch”
But at least you should know what’s on the menu and that you’ll get what you ordered.
- Business Juice offer a business only comparison service
- Business Juice do not and never have operated the policy of ‘hiding’ best deals
- Business Juice operate a ‘whole of market’ panel of business energy suppliers
- Business Juice offer an impartial service and are entirely commission agnostic
- Business Juice provides a thorough market reviewto all our customers in advance of contracting
- Business Juice ensures the final decision is always with the customer regardless of their choice
- Business Juice’s customers have access to a Key Facts statementincluding details of any commission earnt
- Business Juice operate verbal recordings to provide customers with 100% confidence in our service