A switch, not a stitch-up: sites seek our trust

Now with added consumer protection: the services that help us save on household bills

Free price-comparison and switching websites, one of the jewels in the crown of consumer power, are coming under scrutiny.

Energywatch, the gas and electricity consumer watchdog, last week unveiled a tougher, revamped "code of confidence" for the sector. Websites that sign up to this voluntary agreement must explicitly disclose the names of companies that pay them commission, and must use the same calculations for bill-comparison purposes. The watchdog will also monitor all the services to make sure that none make false claims to be members of the new scheme.

The revamped code of practice has been introduced following concern that some of the websites (not named by Energy-watch) haven't been playing by these rules, with the result that consumers might not get the best deals.

The Government has weighed in too, with energy minister Malcolm Wicks publicly backing the new code.

"If a fuel-switching website doesn't have the code, consumers should go to one that does," an Energywatch spokesman stresses. "They must have confidence that the information and advice given by price comparison sites is accurate, impartial and reliable."

Significantly, Ofcom, the telecoms regulator, is also reviewing its current badge of accreditation for websites that let consumers switch their home phone or broadband supplier (and mobile phone and digital TV deals as, over the next few months, switching websites start to offer these services too).

Ofcom's accreditation - called Pass - has had a very low take-up. Uswitch.com is the only website to have gained it so far, although its rival, simplyswitch.com, is in the process of applying. Part of the problem is that it's up to companies to apply to Ofcom rather than the other way around.

The regulator is also looking at the online switching industry as part of a broader, two-month consultation on consumer issues that closes in April.

"Switching websites trade on a very valuable currency - consumer information," says a spokesman for Ofcom, which is concerned at a lack of customer awareness: most people under-estimate the advantages to them of switching utility supplier.

A perception that the process is fraught with problems continues to discourage potential switchers, Ofcom adds. Many harbour fears of their gas, electricity or phone being cut off, or their financial details falling into the wrong hands.

The regulators are not alone in their concern. Ed Mayo, chief executive of the National Consumer Council (NCC), expressed doubts in December that the switch-and-save message was getting through to enough people.

The elderly and those on low incomes were half as likely to switch as younger and wealthy consumers, Mr Mayo warned.

He called on regulators in each market to promote the benefits of switching and investigate what the NCC believes are anti-competitive practices such as onerous "early exit" charges levied by providers when customers leave.

Today, there are around 20 UK-based price-comparison or switching websites. They include unravelit.com, switchwithwhich.co.uk, moneysupermarket.com, uswitch.com and simplyswitch.com.

Each time one of these sites helps a customer to change supplier, it earns commission, and the new code of practice demands that the way a supplier is listed must not be determined by the amount of commission it pays.

All the websites rely on good relations with suppliers to ensure that the most up-to-date information is available. Most receive either a flat-fee commission if a switch is made (or where a company link is clicked on, in the case of price-comparison sites), a percentage fee, or a mix of both.

Two of the UK's biggest switching websites are uswitch.com and Simplyswitch.com. Both report that the number of people using them is rising.

Karen Darby of simplyswitch estimates that 100,000 consumers changed to a better deal using either its website or phone service last year. "About one in 10 visitors to our site switch," she says. "Most use it for research and then go direct to the company."

For consumers, this is the attraction of such sites: being able to browse, free from the patter of pushy sales staff. Switching will cost you nothing, and your new supplier and old company handle the transfer on your behalf.

According to uswitch, an individual who has never changed supplier before could save as much as £254 in the first year on credit cards, loans and current accounts; £140 on fuel bills; £120 on home phone bills; and £180 on broadband.

Anyone who has yet to switch any part of their household bills - recently estimated by Energywatch to total close to £1,000 a year on average - will almost certainly make big savings.

The energy regulator Ofgem recently pitched into the debate, urging anyone who hasn't yet moved away from their energy supplier - British Gas in the majority of cases - to do so.

Switching does have its limits, though. Changing supplier more than once every three months, say, is unlikely to yield much in the way of cash savings because prices probably won't have changed that much in the meantime.

Ms Darby warns that the increasingly popular "bundled" deals - where you get broadband, digital TV and your home phone calls from one supplier - don't usually offer the best value. "Some parts of the deal will be good, others not so."

Always check to see if the switching website has a channel for complaints - although most problems appear to stem from either the old or new supplier.