Parliamentary Committees and Public Enquiries
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Price comparison sites should pay compensation to misled energy consumers
Commission-driven price comparison sites should pay compensation to energy consumers misled into switching to deals that were not the cheapest available on the market, MPs on the Energy and Climate Change Committee have demanded.
- Report: Protecting consumers: Making energy price comparison websites transparent
- Report: Protecting consumers: Making energy price comparison websites transparent (PDF)
- Inquiry: Energy price comparison websites
- Energy and Climate Change Committee
Chair's comments
Tim Yeo MP, Chair of the Energy and Climate Change Committee said:
"Consumers trust price comparison services to help them switch to the best energy deals available on the market. But some energy price comparison sites have been behaving more like backstreet market traders than the trustworthy consumer champions they make themselves out to be in adverts on TV.
Some comparison sites have used misleading language to dupe consumers into opting for default options that only display commission earning deals. And others have previously gone so far as to conceal deals that do not earn them commission behind multiple drop-down web options.
As an immediate and essential first step towards rebuilding confidence, the companies should compensate any consumers who have been encouraged to switch to tariffs that may not have been the cheapest or most appropriate for their needs."
The Committee is calling on Ofgem to consider requiring price comparison websites and other third party intermediaries to disclose – at the point of sale – the amount of commission received for each switch. The MPs are also calling for sites to use clearer language and show all deals to consumers by default. Chair Tim Yeo MP commented:
"We have no objection to commission being paid by suppliers to price comparison websites as long as the arrangements are clearly disclosed."
The current voluntary Consumer Code for energy price comparison sites does not provide adequate consumer protection, according to the MPs. Not all price comparison websites are eligible to apply for accreditation, consumer awareness of the Confidence Code is low and consumers will often opt for websites with big advertising budgets regardless of their accreditation status, the report points out. The Committee is calling on Ofgem to look into the possibility of introducing a licence-based system for price comparison websites or alternatively a licence requirement on energy suppliers to use only Ofgem accredited websites.
Tim Yeo MP concluded:
"The current hands-off approach is clearly not working and the lack of contrition from some companies even when faced with proof that they misled customers has convinced us that some form of licensing of energy price comparison sites may be needed.
If the Government wants more people to switch energy supplier then it has to ensure that energy price comparison services are transparent and trusted.
We recognise that the criticisms contained in this report do not apply across all price comparison websites. We hope that the debate sparked by this report on how price comparison websites operate will provide all sites – both good and bad – with an opportunity to take stock of their operations and strive for greater transparency."
Further information
