MPs warn of 'further consumer mistrust' if price comparison site changes allowed

MPs have urged the Government to drop a recommendation allowing price comparison sites to display only the energy deals that earn them a commission.

The Energy and Climate Change Committee has written to the new Business Energy and Industrial Strategy Secretary Greg Clark to raise concerns that the recommendation by the Competition and Markets Authority (CMA) could undermine consumer trust and disadvantage smaller suppliers, therefore harming competition.

The committee said it was urging the Government not to implement the recommendation.

Committee chairman Angus MacNeil said: "Price comparison websites must do what they say on the tin.

"Consumers expect price comparison sites to shine a light on the whole market, not keep them in the dark and push them into commission-earning deals."

The CMA's recommendation that price comparison websites should no longer be obliged to show deals on which they do not earn a commission was included in its final report following a two-year inquiry into the energy market, published the day after the EU referendum result.

Roger Witcomb, chairman of the CMA's energy market investigation panel, said the job of price comparison sites was to provide better deals for customers, adding that they should do this by negotiating with energy suppliers, as was the case in other markets.

He said Citizens Advice already ran a website which compared all the energy deals available.

But Mr MacNeil said at the time that the CMA's recommendation would mean that comparison sites would become advertising sites and "lead to further consumer distrust of the whole edifice around energy".

In February last year a report by MPs warned that consumers were being misled into switching to deals that were not the cheapest on the market and said those who had lost out as a result should receive compensation.

Ofgem later published a revised code for comparison sites stating that they must include deals for all available domestic tariffs as a default.

Luke Watson, the managing director of GB Energy, which gave evidence to the committee, said: "It is completely illogical to allow comparison sites to restrict access to the cheapest deals.

"We urge the Government to work with us and other small energy suppliers to find an alternative solution which ensures that bill payers get the best possible deals, rather than rubber stamp a remedy that creates the potential for a cartel between the Big Six suppliers and the Big Two comparison sites."

The CMA said: "The fact is that the current rules mean price comparison websites are not operating at full power in the energy market.

"The whole of the market requirement does not exist in other markets - like motor insurance - where price comparison websites have shown they can play a powerful role in using their marketing firepower to increase switching and drive down prices.

"As Which? noted at the hearing, price comparison websites in competition with each other will be battling to display the cheapest deals - that is how they win business from their rivals. Where PCWs have had the most positive impact, they have not had incentives to hide good deals from consumers.

"Our recommendation has been made to Ofgem rather than the Government so it will be for them to decide whether to implement the changes."

A BEIS spokesman said: "The CMA has recommended that price comparison websites should compete against each other to offer their customers competitively priced deals.

"Competition is key to delivering an effective energy market and driving down prices for billpayers. It's important that industry work together to encourage consumers to switch supplier."