Let price comparison websites hide cheap energy deals again, says Ofgem
The energy watchdog said the change would allow sites to offer more competitive deals
ENERGY watchdog Ofgem came under fire yesterday for proposing price comparisons websites should be allowed to hide the cheapest deals on the market.
The sites were last year ordered to show customers all available tariffs after The Sun exposed how they were taking kickbacks for pushing certain deals - while concealing better ones.
But yesterday Ofgem endorsed proposals put forward earlier this year by the Competitions and Markets Authority (CMA) to revert to the old system of deal-hiding.
Both authorities bizarrely claim it would encourage the sites to offer more competitive deals.
But furious consumer campaigners and MPs argue shoppers could be misled because they can’t see all of the tariffs available.
The plan was among a raft of proposals put forward by Ofgem yesterday in response to the CMA’s two year investigation, published in June.
They include a cap on pre-payment meter tariffs and a database allowing suppliers to advertise cheaper deals to customers on standard variable rates for three years or more.
Dr Dan Poulter MP and member of the House of Commons Energy and Climate Change Select Committee said: “There is no way allowing price comparison sites to hide the cheapest deals is in the interests of consumers.
“People quite rightly expect to be shown all deals out there when they do a comparison not just the deals that earn a price comparison site a commission.
“If Ofgem does this then it will be a backwards step that will hurt consumers and the smaller suppliers who have the best deals.”
Ofgem boss Dermot Nolan said removing the need to show all tariffs was not a done deal.
He said: “We really want to hear people’s view on the issue of price comparison sites and whether and how they show all deals on the market.
“The CMA has suggested removing this requirement will drive competition.
“But equally we are concerned about the impact on the trust in price comparison sites.”
Will Hodson, co-founder of the consumer group The Big Deal, said: “The public’s trust in comparison sites also looks set to crumble, as Ofgem will allow them to hide any deal that doesn’t earn them a commission.
“These deals are often the cheapest on the market, so consumers will miss out on savings and competitive suppliers will be hidden from view.
“That can only hurt competition and benefit the Big Six - a bizarre outcome from a two year competition inquiry.
“The CMA’s two year investigation has done little to help consumers and may well do more harm than good.
“Whilst it’s good news that Ofgem are to cap prices for those on prepayment meters, for the vast majority of people, there will be no price protection.
“Instead, Ofgem will place British consumers on a database open for all energy suppliers to approach with deals. Such spam is both unwelcome and ineffective because the public don’t trust energy companies anyway.”
The CMA has said it thinks relaxing the rule on comparison sites showing all deals will lead to more competition between PCWs. It’s theory is they then have more incentive to seek out exclusive deals with suppliers - even though they already do this.
MPs and consumer groups have disputed the logic.
Ofgem's proposals
1. Price cap until 2020 on prepayment meters. It will mean the four million “vulnerable” customers with these types of meters will see millions slashed off their bills in total each year - or around £75 each on average.
What it means: A good move that should stop the four million on them from paying too much. It is very hard for those on PPMs to switch supplier since a special meter is needed.
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2. Database of contact details for families who have been on the pricier “standard” tariff for three years - to allow rivals to contact them.
What it could mean: Families bombarded with junk mail unless they opt out.
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3. Remove rule that price comparison websites like uSwitch show all the deals on the market.
What it means: The sites can go back to hiding the best deals from customers - as they were doing before The Sun exposed their shady practices in late 2014. They had been taking kickbacks for pushing rip-off deals.
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4. Removal of the four tariff rule that means energy firms can only offer four different deals.
What it means: Ofgem created the rule so families were not confused by thousands of deals. It could lead to confusion again - but it will also create more varied tariffs.
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5. No price cap on standard variable tariffs - the deal that seven in ten families are on.
What it means: The CMA worked out any family on an SVT is paying £300 too much. Unless authorities really can encourage more homes to switch, this will continue.