7th Report - Protecting consumers: Making energy price comparison websites transparent - Energy and Climate Change Contents

Conclusions and recommendations

Our findings

1.  There have been a number of issues raised about the practices of some price comparison websites. We are particularly concerned by reports about:

i)  the default presentation of deals by some websites (i.e. commission only deals versus a full market view);

ii)  the misleading language used to provide consumers with a choice of which presentation to pick;

iii)  the lack of transparency about commission arrangements; and

iv)  the inadequate arrangements for regulatory oversight.

We stress that these concerns do not apply across all price comparison websites as there are a range of practices across different websites—for example, some websites already default to a full market view. (Paragraph 10)

Default presentation of deals and leading language

2.  We conclude that all energy price comparison websites should show as default all deals available in the energy market-regardless of any commission arrangements between the sites and the suppliers. We strongly object to the use of leading language used by some websites which can only be interpreted as a deliberate and underhanded attempt to hide deals. (Paragraph 14)

3.  Price comparison websites should be clearer in the language their sales staff use over the phone when explaining which deals are available-particularly when consumers may not be aware that cheaper deals may be available to them via another route. We consider that consumers should receive the same level of protection and access to redress regardless of how they engaged with a third party intermediary when switching energy supplier. We recommend that Ofgem extend requirements relating to transparency and accuracy of price comparison websites to cover telesales activity, collective switching schemes and face-to-face sales. (Paragraph 17)

Transparency of commission arrangements

4.  Price comparison websites provide a service to consumers that helps them save money on their energy bills. It is right that they should be able to operate in a profitable way. We have no objection to commission being paid by suppliers to price comparison websites as long as these arrangements are clearly disclosed. We welcome Ofgem's drive for greater transparency of commission arrangements. Ofgem should also consult on the merits of requiring price comparison websites and other third party intermediaries to disclose-at the point of sale-the exact amount of commission received for each switch. (Paragraph 22)

Regulatory oversight of the websites

5.  In the same way that requirements relating to transparency and accuracy of price comparison websites should cover other methods of engagement with consumers (e.g. telesales activity, see paragraph 17), these requirements should also apply to the full range of price comparison website-including those that work with a "white label" partner. (Paragraph 23)

6.  The current hands-off approach of a voluntary code of practice that few consumers have heard of is clearly not working. However, we recognise that there would be a cost associated with a licence-based system to help Ofgem regulate energy price comparison websites and other third party intermediaries and that the companies might attempt to pass this on to consumers. We recommend that Ofgem urgently carry out a full impact assessment of moving to a licence-based system for price comparison websites or alternatively a licence requirement on energy suppliers to use only Ofgem accredited websites, paying particular attention to ensuring that any proposed changes are in the best interest of consumers. (Paragraph 26)


7.  Switching must be made easier in order to engage consumers in the energy market and helping to foster competition amongst suppliers and drive down energy bills. However, recent reports of unscrupulous practices amongst some energy price comparison websites have damaged consumer trust both in the websites themselves and in the switching process more generally. (Paragraph 27)

8.  We recognise that the criticisms contained in this report do not apply across all price comparison websites. We hope that the recent debate on how price comparison websites operate will provide all sites-good and bad-with an opportunity to take stock of their operations and strive for greater transparency. Some of these websites need to do much more to live up to the claim that they are consumer champions. (Paragraph 28)

9.  As an immediate and essential first step towards rebuilding confidence, any consumers who have been encouraged to switch to tariffs that may not have been the cheapest or most appropriate for their needs should be compensated. We urge the price comparison websites to put in place a straightforward process for consumers to seek compensation. (Paragraph 29)

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Prepared 28 February 2015