MPs warn on energy switching deals


Published: Saturday 28th February 2015 by The News Editor

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Price comparison sites should pay compensation to energy customers who have been misled into switching to deals that were not the cheapest on the market, MPs have said.

The Energy and Climate Change Committee said some sites had used misleading language to “dupe” consumers into default options that only displayed commission-earning deals.

It is calling on Ofgem to consider requiring price comparison sites and other third party intermediaries to disclose the amount of commission received for each switch at the point of sale.

And it wants sites to use clearer language and show all deals to consumers by default.

Committee chairman Tim Yeo said: “Consumers trust price comparison services to help them switch to the best energy deals available on the market.

“But some energy price comparison sites have been behaving more like backstreet market traders than the trustworthy consumer champions they make themselves out to be in adverts on TV.

“Some comparison sites have used misleading language to dupe consumers into opting for default options that only display commission-earning deals. And others have previously gone so far as to conceal deals that do not earn them commission behind multiple drop-down web options.

“As an immediate and essential first step towards rebuilding confidence, the companies should compensate any consumers who have been encouraged to switch to tariffs that may not have been the cheapest or most appropriate for their needs.

“We have no objection to commission being paid by suppliers to price comparison websites as long as the arrangements are clearly disclosed.”

Earlier this month the price comparison website uSwitch told the committee it would compensate consumers who had been misled into signing up for an energy tariff that was more expensive than others available.

Steve Weller, the chief executive of uSwitch, told the committee that he was “sincerely disappointed” that a customer was told by his call centre that the cheapest deal available to him was with First Utility, when it was in fact with extraenergy for more than £60 less.

Representatives of the “big five” sites told MPs they earn up to £30 in commission every time a customer switches to a participating provider, or up to £60 when a customer switches both their gas and electricity accounts.

Ofgem launched a consultation on the code governing the sector in August, with the newly revised rules announced last month.

The regulator has banned sites from automatically showing a partial view of tariffs from suppliers paying commission to it.

Instead, they must show all those available in the market – unless customers actively choose to see a smaller number of tariffs.

However the committee is calling on Ofgem to look in to the possibility of introducing a licence-based system for price comparison websites or alternatively a licence requirement on energy suppliers to use only Ofgem accredited websites.

Mr Yeo said: “The current hands-off approach is clearly not working and the lack of contrition from some companies even when faced with proof that they misled customers has convinced us that some form of licensing of energy price comparison sites may be needed.

“If the Government wants more people to switch energy supplier then it has to ensure that energy price comparison services are transparent and trusted.

“We recognise that the criticisms contained in this report do not apply across all price comparison websites. We hope that the debate sparked by this report on how price comparison websites operate will provide all sites – both good and bad – with an opportunity to take stock of their operations and strive for greater transparency.”

A Department of Energy and Climate Change spokesman said: “Millions of pounds have been saved by using price comparison sites to switch – by shopping around people can make sure they find the best energy deal available.

“Consumer trust and confidence in price comparison sites is important – and with Ofgem’s strengthened Confidence Code people will be able to have greater confidence than ever before that, by switching, they’ll save.”

Citizens Advice chief executive Gillian Guy said: “Shopping around can cushion the blow of high energy prices. Energy costs have soared over the last few years, meaning it is really important cash-strapped households are able to easily switch to get the cheapest price.

“Comparing prices using Ofgem’s Confidence Code accredited websites are the best way for energy customers to compare tariffs but only if they show all the deals available across the whole market.

“Citizens Advice has found that consumers aren’t always guaranteed they’ll get the best deal when they use a comparison website. In some cases websites are limiting the choice on offer or push people towards deals that earn the company the best commission.

“The Energy and Climate Change Committee’s intervention on this matter is an important step towards making the energy market work for consumers.”

Published: Saturday 28th February 2015 by The News Editor

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