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)
Conclusions
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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