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Select committee inquiry

Energy price comparison websites inquiry

Closed

Energy and Climate Change Committee · Opened 16 December 2014 · Closed 30 March 2015

3 recommendations · 6 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“The Energy and Climate Change Committee will hold a one-off evidence session on energy price comparison websites. The Committee will looking at: The role of energy price comparison websites and how they operate Transparency of commission received for different energy plans Consumer trust in energy price comparison websites Arrangements for oversight of these websites, for example through the ‘Confidence Code’, a Code of Practice that governs independent energy price comparison sites”

The committee's words, from the inquiry page on parliament.uk ↗.

What the government said

The government responded on 26 March 2015.

Summary written by Accountability Index from the government's response.

The Government agrees with the Committee that comparison sites should show all tariffs by default, but does not see benefit in requiring commission to be displayed at point of sale, and wishes to consider Competition and Markets Authority findings before any further action.

  • On default display, the Government notes that Ofgem's revised Confidence Code, which "will come into force at the end of March", will require sites to show all tariffs unless consumers actively choose to see fewer, and to explain that they earn commission.
  • On telesales and "white label" sites, the Government agrees there is "a strong case" for wider Code coverage, but says it will be important to consider the Competition and Markets Authority's findings "in the context of extending the scope of the Code".
  • The Government "does not see benefit" in requiring display of commission per switch at point of sale, citing possible consumer confusion, though it says "this is ultimately a matter for Ofgem".
  • On licensing, it says further regulation "could risk stifling the innovation" and that it is important to wait for the CMA's findings "before considering whether further action might be necessary". On compensation, it says this is "a matter for the price comparison sites".

Read the government's response ↗ Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 16 December 2014 to its close on 30 March 2015.

  1. Oral evidence 3 Feb 2015
  2. Report 28 Feb 2015
  3. Government response 26 Mar 2015
  4. Correspondence 6 letters

What it recommended 3 recommendations · 6 conclusions

1There have been a number of issues raised about the practices of some price comparison...
Concluded (the committee's words)
There have been a number of issues raised about the practices of some price comparison websites. We are particularly concerned by reports about: the default presentation of deals by some websites (i.e. commission only deals versus a full market view); i) the misleading language used to provide consumers with a choice of which presentation to pick; ii) the lack of transparency about commission arrangements; and iii) the inadequate arrangements for regulatory oversight. iv)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.
2We conclude that all energy price comparison websites should show as default all deals available...
Concluded (the committee's words)
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.
3Price comparison websites should be clearer in the language their sales staff use over the...
Recommended (the committee's words)
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.
4Price comparison websites provide a service to consumers that helps them save money on their...
Concluded (the committee's words)
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.
5In the same way that requirements relating to transparency and accuracy of price comparison websites...
Concluded (the committee's words)
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.
6The current hands-off approach of a voluntary code of practice that few consumers have heard...
Recommended (the committee's words)
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.
7Switching must be made easier in order to engage consumers in the energy market and...
Concluded (the committee's words)
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.
8We recognise that the criticisms contained in this report do not apply across all price...
Concluded (the committee's words)
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.
9As an immediate and essential first step towards rebuilding confidence, any consumers who have been...
Recommended (the committee's words)
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.

Evidence

Oral evidence sessions 1

Correspondence 6 letters