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Nolan backs new Ofgem comparison site rules

ofgem-logoDermot Nolan, CEO of Ofgem has backed up the new rules set out earlier this year with regard to price comparison websites (PCWs).

Ofgem amended its Confidence Code, ensuring that all PCWs now provide a “whole of market view” of tariffs, rather than hiding some suppliers or deals with the view to restoring customer confidence.

Hiding deals was becoming common practice with some PCWs showing a limited number of tariffs to choose from, in order to get them the highest commission.

While we applaud the move – Business Juice has always based their business on transparency and honesty – Ofgem received a barrage of criticism from some PCWs complaining that the new rule was restrictive and stopping the sale of more innovative deals.

Undeterred Nolan has defended the decision and explained that the established system would have to be revisited again soon.

“It does seem likely to me that in the next few years more and more consumers won’t just buy energy alone––they might buy energy, telecoms, there’s competition coming in water.

How we place conditions in our Confidence Code on switching sites in that area is going to be a huge challenge. If someone says I want to use a switching site for communications and energy, but they have different rules, how do we give customers confidence they can use them adequately?”

There has even been a suggestion from the CMA to implement an Ofgem-run comparison site although this may now be unnecessary as Citizen’s Advice seem to have taken the reins on this idea of an impartial switching site.

Ofgem has also raised concerns over a lack of transparency with regard to supplier commissions received by the comparison sites. However, while Ofgem has the power to ensure switching sites reveal their commission levels, reports suggested that this was unnecessary and unlikely to benefit consumers.

We disagree. This is an issue close to our heart as we ourselves at Business Juice, reveal our commission payments to our customers in our Key Facts Statement. We believe that openness is required to gain customers loyalty and trust and commission disclosure would help to promote future PCW honesty.

Another issue comes in the form of the PCW itself. The internet has fast become the first port of call for switching but there’s some concern over those without access. Nolan stated he would allow doorstep selling in this case as long as suppliers ‘behave themselves.’

Despite concern over ensuring all customers have the opportunity to switch, Nolan was less keen on implementing the safeguard tariff set out to protect disengaged customers from exorbitant rates, explaining that it would be ‘difficult to administer.’

Nolan asked: “When would it be changed? Wholesale prices change, and therefore the probable retail price changes; on the other hand most evidence suggests that consumers probably don’t want electricity and gas prices changing every week. There would have to be a mechanism that we would have to think through as to when and how it was changed.”

We completely agree Nolan. The safeguard tariff should be replaced with a strategy to educate disengaged customers and allow them to switch suppliers for themselves.

Nolan is keen to boost competition in the energy markets and ensure fairness from the suppliers. We’re right behind him.

With a gobsmacking 68% price difference between the cheapest and most expensive one-year business electricity tariffs on the market, it’s clear there are some huge savings to be made by switching.

We can compare the whole of market for you. For an instant business energy quote, give Business Juice a call on 0800 051 5770, email us at quote@businessjuice.co.uk or use our contact form.

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