Shuffling in like naughty schoolboys before the headmaster, the bosses of the Big 5 price comparison websites were last week called before the energy and climate change select committee in order to be grilled on widespread concerns about alleged profiteering and partiality.
The change in mood around price comparison websites began in late 2014 with revelations of the ‘hiding’ of deals that would not earn the household name websites sufficient revenues.
Rip off
The Big 5, uSwitch, Moneysupermarket, Confused, GoCompare and ComparetheMarket, were accused by Labour MP John Robertson of:
“Some kind of ethos in the energy market that says I want to rip off every person I get hold of”
Committee member Ian Lavery was even more damning in his description of the issues:
“Someone is paying for these [companies] profits. We support advising people to switch, but we do so on the basis that the price comparison websites are trustworthy. From what has been explained this morning that is not the case.
“I am appalled at the evidence. I think it is a case of the companies deliberately misleading potential customers in order to maximise profits.”
The crux of the challenge to the Big 5 is the hiding of deals as well as the opaque terms in which they receive payment.
This commission level, estimated to be as much as £60 for a dual fuel contract, was accused of being the diviner as to whether a deal would even be displayed by the websites. No payment, no promotion was the accusation.
Following direct external pressure the comparison services have now amended their websites to show the full range of tariffs available, regardless of whether they’ll make a commission. That is clearly good news for the consumer but old habits appeared to die hard in some of the responses from the executives.
Force for good
Moneysupermarket chief executive Peter Plumb explained:
“The fees are required to fund the price comparison sites. We are not a simple computer programme. We have to spend money on technology and we have to spend money on marketing.”
Phil Morgan of Go Compare apparently fresh from watching Star Wars said:
“We are a force for good.”
Confused.com’s Martin Coriat helpfully added:
“We save people money, that is what we are here for.”
Whilst Steve Weller of uSwitch seemingly robotically reading straight from his company’s website (majority owned by tax payer funded investment bank LDC) said:
“[We provide] a valuable free service that helps consumers to save hundreds of millions a year”
Yet that is about as open as it got. Indeed things were about to become very bizarre.
Confusion
As ever the root cause of this odd behaviour came courtesy of Ofgem, the energy regulator, who far from siding with the select committee’s concerns actually suggested:
“There is a risk that including this information may confuse consumers or lead them to make a poor decision, for example selecting a more expensive tariff because the site receives less commission for it.”
This information? The commission a price comparison website earns from a deal.
Wow. So the energy regulator thinks it would be WRONG for a customer to be made aware of the level of commission a price comparison website is earning from a deal.
The select committee themselves surprisingly weren’t in the slightest bit convinced, instead suggesting the “commission charge” should be made clear to customers.
Happily toeing the Ofgem line and perhaps not quite believing the support they had received, the Big 5 bosses quickly responded that such a thing as transparency could confuse customers and prove to be unhelpful.
Seriously, they really said it.
Ofgem compounded their apparent madness in written evidence by suggesting that it was indeed acceptable for price comparison websites to be anything but transparent in their commission earnings as “the level of commission a site receives does not impact the price that a consumer pays”.
The money fairy
OK Ofgem, let’s just run through that again. If the customer isn’t paying for the privilege who is? The money fairy?
The levels of wilful lack of transparency appear to match our own wilful commitment to transparency in their extremes.
The fact is suppliers pay commission to the websites and the customers pay suppliers for the energy, within which is included the cost of sales. To suggest otherwise is being deeply disrespectful to our intelligence.
Surely it is far better to be open and honest and accept that this ‘added’ cost is actually good value for money compared to alternative methods of attracting customers, such as national advertising campaigns, sponsoring football leagues and the like.
But no, seemingly like the view of their under fire business models the bosses appeared to prefer to remain on the defensive rather than openly explain the benefit and service their companies provide.
With the strength of the Big 5 comparison websites brands, uSwitch, Moneysupermarket, Confused, GoCompare and ComparetheMarket, second only to those of the Big 6 Energy companies, British Gas, E.ON, Npower, SSE, Scottish Power and EDF Energy, the ready made client base that will undoubtedly continue to use their services deserve a whole lot more.
Disclosure:
Business Juice operate a policy of full commission disclosure offering customers a unique Key Facts document detailing all contract details, the savings made and crucially any payment that Business Juice may receive from the energy supplier.