In a report published today, the Energy and Climate Change committee slammed commission-led comparison sites for “damaging trust” in the switching process, and demanded that consumers who have been “duped” receive compensation.
The report blamed Ofgem’s current voluntary code of practice and called on the regulator to establish either a new licence-based system for sites, or a licence requirement on suppliers to use only accredited sites.
Last month, Ofgem said it had strengthened its consumer confidence code designed to ensure sites display all available tariffs, use clear language and make commission arrangements transparent. However, the report pointed out that not all sites are eligible for Ofgem accreditation, and consumer awareness of the code is low.
The committee said sites must clearly display all available deals on the market and be “clearer in the language their sales staff use over the phone” so consumers are aware of cheaper deals.
The report also recommended that Ofgem extends requirements relating to transparency and accuracy of sites to cover telesales activity.
MPs launched the inquiry into switching sites late last year, following accusation from the rival site the Big Deal that the UK’s ‘big five’ comparison sites were “hiding the best deals” from consumers.
Committee chair Tim Yeo said: “If the government wants more people to switch energy supplier then it has to ensure that energy price comparison services are transparent and trusted.”
Green Energy UK agrees with the report. Chief executive Doug Stewart said: “Consumers have an absolute right to impartial information on all of the services that energy companies provide and energy comparison sites can be part of the answer.”
However, he continued: “Our consumers make decisions based on the quality of our service and where the energy we buy comes from, not just the price.”
Ofgem fended off criticism, maintaining that it had set “much tighter requirements” which “most accredited sites are now adhering to”.
At present, 11 of the comparison sites are Ofgem-accredited.
A spokesperson for the regulator said: “Following Ofgem’s referral, the Competition and Markets Authority (CMA) is now considering the role of price comparison sites as part of its wider review of the energy market. We will carefully consider the committee’s recommendations alongside the CMA’s findings.”
Gocompare.com, a site which is not accredited, also hit back. Chief finance and operating officer Phil Morgan insisted comparison sites are a “force for good” which “empower customers and help them save money”.
Morgan said: “We can’t tackle the issues facing the energy industry alone. The onus is on the industry as a whole to work together to address the problems that put people off shopping around in the first place.”