As a member owned business – with no shareholders - we felt it only right to champion the push for an independent information and comparison service. A free to use service which customers know will present all the available tariffs and supporting information to let them make an informed decision on which energy supplier to use. Energy comparison sites are currently unregulated and as such, we believe, are not always operating in the best interests of consumers.
Customers have a right to be able to compare energy tariffs and currently some sites operating are not being transparent in their dealings and are deliberately directing customers only to commission generating tariffs. This is yet another example of the lack of transparency which energy consumers are exposed to.
Many of the switching sites present themselves as a service, when in reality they are profit maximising sales organisations, leading customers by default to the tariffs that pay commission.
There are claims by comparison sites that their service is free to use. But we know it is the customer that ultimately ends up paying for this commission as it is added to their energy bill. Removal of this commission based-structure entirely can only be good news for customers as it would lead to a drop in energy bills.
We know that not all comparison sites are the same but what we are saying is that consumers must be adept at navigating the sites effectively in order to see all the tariffs available. Many ask leading questions which act as a channel for sharing the deals which ensure a commission for the site. This is misleading as there may be a deal available that the site does not have a commission arrangement with, but would be better suited to the customers’ energy needs. The customer could easily sign up for this deal directly via the suppliers own website. The prices being quoted are exactly the same as the price a customer would pay if they went to the energy supplier direct.
Some of the methodology the switching sites use for calculating annual savings is questionable. Lots of assumptions are made which do not always put the customer first. For example, sites often assume that when a product ends, the customer will rollover to a variable rate which has a higher unit cost attached. This results in some customers being sold a product which is not always the best and most suitable deal available
Another area of concern is that the cost to acquire via the switching sites is greater than the total profit gained by the supplier who manages the total risk. Under Ofgem rules, it is important that the end bill is cost reflective and the customer is paying a fair price.
The comparison sites claim they only charge a small admin fee when in reality what they charge is a sales commission. Even describing the commission as an admin fee is misleading consumers as it infers only a small charge.
As energy suppliers we are legally bound by confidentiality clauses, which take both parties to agree disclosure. I give permission for disclosure, therefore releasing those switching sites with whom we are contracted from confidentiality. If they refuse to disclose how much we pay that is their choice, there are no legal restrictions.
There is no questioning the convenience factor comparison sites provide. How many of us have the time to research multiple websites looking to get the best deal whether it is for a new energy, insurance or mobile phone contract?
In our ongoing crusade to bring transparency to a sector that has become increasingly confusing, Co-operative Energy will continue to campaign hard to protect the customer by calling for the creation of an impartial not-for-profit information and comparison site, which is properly regulated by OFGEM or the Government. In the interest of helping to bring down energy bills further and operating a fair and transparent energy market, this is what consumers need.