Consumer watchdog to probe price comparison sites over practices
The Competition and Markets Authority (CMA) has announced that it will be looking into the way that price comparison websites work. It will also look at whether these sites are trusted by their customers and whether consumers should get to see how these sites earn their commission.
The study will look at all price comparison websites from the ones that focus on a number of sectors to specific price comparison sites which only look at broadband, energy, insurance or banking. There has been a lot of concern from many organisations regarding consumers not always being made aware of the cheapest deals and they cannot usually switch immediately.
The investigation will give the watchdog the opportunity to revisit the decision it made in June with regards to the energy market, that comparison sites are no longer obligated to show the cheapest deals. This has resulted in deals where commission is being made showing up more regularly to customers.
Acting chief executive of the CMA, Andrea Coscelli, spoke to the BBC regarding these types of sites; “Digital comparison tools have played a big part in changing markets for the better, bringing new ways of doing things and forcing businesses to up their game. Consumers have benefited as choice and access to goods and services have grown.”
The CMA’s report will examine four main areas relating to price comparison websites, these are:
- The effectiveness of existing regulation
- How effectively comparison tools compete with others in their area
- What customers expect from comparison tools along with how they use the tools and their experiences (positive and negative)
- The impact of these tools on competition between suppliers that are listed on these sites
GB Energy managing director, Luke Watson, feels that the CMA is clueless when it comes to comparison websites. He spoke to the BBC surrounding this latest investigation; “It makes a farce of the CMA’s energy market review, which handed more power to the comparison sites only a few months ago… some of those sites are also being investigated for anti-competitive practices… these sites are profit-making machines posing as consumer champions, and they need proper regulation.”
These revelations come as a blow for money saving experts and bloggers who try to help consumers save money with one of their major pieces of advice being to switch energy providers. A lack of trust in some of these websites may have a negative effect on people using them therefore leaving many paying more for their energy.
A good alternative can be Money Saving Expert’s Cheap Energy Club which works in much the same way as a standard market comparison tool. The difference is that all deals from across the market are shown making sure you can see the cheapest deal for you. Plus, the £30 (single fuel) or £60 (dual fuel) fee comparison sites receive for supplying a new customer to an energy supplier is not used for profiteering.
You will receive £15 or £30 (dependent on fuel switch) cashback and the rest will go towards paying staff with a small margin for profit. With an open and honest policy, it has already attracted over 2.5 million customers to date helping them save money on their energy bills and alerting them when a cheaper tariff is available.
Whatever your opinion on price comparisons websites, it is thought that this new survey will improve practices making the experience better and simpler for consumers. The report is set to be published in late 2017 and is likely to make some suggestions about how these companies should conduct themselves in the future.
References and further reading
Header Image – Go Compare – http://www.cityam.com/252872/gocompare-demerger-goes-ahead-valuing-shares-new-company
Content Image – Money Saving Expert – Cheap Energy Club – http://www.moneysavingexpert.com/cheapenergyclub