Comparison and switching websites are pushing up energy bills and misleading customers, according to the general manager of Co-operative Energy, Ramsay Dunning.
Mr Dunning said customers were in the dark about the commissions they paid when signing up for an energy contract through these sites. They were being directed towards higher tariffs that generated large commissions, while companies which did not offer big commissions were “hidden away”, he said.
Co-operative Energy is campaigning for a single, impartial, not-for-profit comparison website, regulated by the government or Ofgem. The service should be free to use and present all available tariffs and supporting information, allowing customers to make an informed decision.
Mr Dunning said: “Energy comparison sites are currently unregulated and as such, we believe, are not always operating in the best interests of consumers. Currently some sites aren’t being transparent in their dealings and are deliberately directing customers only to commission-generating tariffs – yet another example of the lack of transparency energy consumers are exposed to.”
He believes the sites mislead customers when they present themselves as a service, when really they are profit-making sales organisations. “There are claims by comparison sites that their service is free to use, but we know it’s the customer that ultimately ends up paying for this commission as it’s added to their energy bill. Removal of this commission based-structure can only be good news for customers as it would lead to a drop in energy bills.”
Mr Dunning has concerns about some of the methodology switching sites used to calculate annual savings, and suggests that in some cases, the profits the sites are making is greater than the profit gained by the supplier.
Co-operative Energy has given comparison sites permission to disclose their commissions in Co-operative Energy’s case but, as yet, none of the sites have taken up the challenge. According to The Telegraph, industry sources say the commissions are typically around £60.
“Under Ofgem rules, it’s important that the end bill is cost-reflective and the customer is paying a fair price,” said Mr Dunning. “The comparison sites claim they only charge a small admin fee when in reality what they charge is a sales commission, which is misleading.
“Not all comparison sites are the same, but how many of us have the time to research multiple websites? In the interest of helping to bring down energy bills further and operating a fair and transparent energy market, an impartial not-for-profit site, properly regulated by OFGEM or the Government, is what consumers need.”
Co-operative Energy’s campaign continues. The next step, Mr Dunning said, was to bring energy suppliers together to discuss the way forward. “There’s support for this among both large and small suppliers,” he said.