Comparison sites rapped by MPs for misleading sales practices
The UK's five biggest price comparison websites have been forced to defend their sales practices before a group of MPs.
The sites - Comparethemarket, Confused.com, gocompare.co.uk, MoneySuperMarket and uSwitch.com - have been heavily criticised for 'hiding' deals that could be suitable for the customer if they don't earn commission from them.
While the practice can affect any product search a customer makes, bosses from the websites were hauled before the Energy Select Committee to defend specifically their gas and electricity comparisons.
During the committee session, it emerged that comparison sites earn around £30 every time a customer switches their energy deal – meaning they earn £60 from a customer switching to a dual fuel gas and electricity tariff.
In late-2014, comparison websites were exposed for burying deals they do not earn commission from, but prominently displaying tariffs that make them money - even if those deals are more expensive for consumers.
John Robertson MP said this practice was not fair to customers: "There seems to be some kind of ethos in the energy market that says, 'I want to rip off every person I get hold of'," he said.
Steve Weller, the chief executive of uSwitch, apologised for misleading customers and said compensation will be paid. Customers who believe they are affected should email email@example.com with details of their deal and the company will investigate.
Will Hodson, co-founder of The Big Deal, a consumer energy-buying collective, said: "The big five switching sites were caught red-handed, misleading customers online and over the phone. It's shocking that only one of these giant companies has actually apologised. It's not good enough. They must all apologise, stop hiding deals and publish all their commissions."
The MPs also quizzed the bosses on the profits their companies make. Compare the Market makes almost £70 million a year, according to its latest accounts. While gocompare.co.uk makes around £20 million.
Gocompare's chief operating officer Phil Morgan said: "Every part of the profit we make is based on a customer saving money. The larger the profit, the more savings we're putting into the market."
Ofgem, the enegy market regulator, last month told to the comparison sites to shape up if they want their services to be accredited. From the end of March they must ensure they include at least 10 tariffs for consumers to compare and they must be upfront about which deals will earn them commission from energy companies.
They will also have to make it clear to customers that they are able to switch energy firms by contacting them directly.
As part of its new code of confidence, accredited comparison sites will also be banned from displaying a 'default partial view' of summary deals from suppliers that pay them the most commission.
This means the sites will have to display all tariffs available, unless the customer actively chooses to see a summary.
The websites must also put an end to the use of confusing language and ensure they explain tariffs and customer choices clearly to their users. This wording must be signed-off by Ofgem.