Price-comparison websites are no consumer champions


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The Independent Online

Outlook Price-comparison websites live or die by their ads, and Moneysupermarket has been on a roll ever since it found an actor willing to strut down the street in a pair of hot pants. Unfortunately, the company’s strut has been brought to a juddering halt courtesy of Ofgem.

Back in February, the energy watchdog said it was looking into whether “two or more parties” had shared information about the commission rates they charge to energy suppliers, which is a major no-no under competition rules. Those “two or more parties” are, as we now know, price comparison websites.

All those involved are keeping their cards very close to their chests, but Moneysupermarket revealed recently that it had “provided information” to the watchdog in relation to its enquiries, and the company’s shares duly fell out of bed. The Zoopla-owned uSwitch is also involved.

Penalties for breaching competition law can be quite painful, which helps to explain the market’s jitters. Ofgem cannot be all that happy with the situation. It is, in fact, rather keen to encourage people to use the services offered by these two websites – and those of their rivals – as part of its attempts to make this country’s dysfunctional energy providers work better for consumers. That is why it has been at pains to stress that its enquiries are not detrimental to customers.

But all of this underlines the point that comparison sites are far from being consumer champions; they are commercial entities whose primary interest is to make money for shareholders rather than users. As long as those users understand that, they can disregard Ofgem’s inquiry and switch away. Just spare us the hot pants.