Misleading 'savings' on comparison sites

BlackpoolMoneySaver

First post, so please be gentle. I apologise in advance if this is a well known point.

Over the last week or so I have been helping my parents find a new energy deal, as their current fixed deal is expiring. I hit up the usual comparison sites for a digest of the latest deals, and went through the usual questions; what deal are you on, what is your usage, and so on.

When the results appeared, I was astonished to see that many of the deals offered were touting huge savings of several hundred pounds. How can this be, my dad puzzled, when they have been fixed for a couple of years, their usage hasn't changed and prices in the mean time have risen unabated?

The reason is this.

When you put your current deal in, you think that this is what the sites will be comparing new deals against. This is, however, not the case. If you are currently on an expiring fixed rate, they actually compare deals with the extortionate variable tariff you revert to when your fixed rate expires. You know, that tariff you probably wont ever be on. The only way you would save the money the sites claim is by being on that variable tariff for a year.

What these sites do not make clear is that whatever deal you switch to using their site, you will be paying more than you are at the moment. None of the energy suppliers are cutting bills, so comparison sites stating you will achieve outrageous savings by switching to sponsored tariff X or Y is tantamount to mis-selling.

I am of the belief that many people are being misled by this. One friend of mine switched and then went and bought something with the two hundred pounds they thought they had saved. Big mistake - they were actually paying more for their energy than they were on their previous deal; the comparison site had compared the latest deals with a variable rate they were never actually on.

Because people with a good reputation such as Martin Lewis are constantly pushing these sites people believe trust the accuracy of the numbers because they assume Mr Lewis has done the homework for them. Not the case. When using comparison sites, if you want to know what the impact on your current monthly outgoings will be you won't get that from any of them; you have to calculate it yourself.

teddysmum

I did wonder why they ask what tariff you are on at present, having believed that they would be comparing what would be available to you in the future, from all providers.


I didn't trust them, anyway, and used prices published on companies' websites to do my own calculations.

AndysDad

BlackpoolMoneySaver wrote: »

First post, so please be gentle. I apologise in advance if this is a well known point.

Over the last week or so I have been helping my parents find a new energy deal, as their current fixed deal is expiring. I hit up the usual comparison sites for a digest of the latest deals, and went through the usual questions; what deal are you on, what is your usage, and so on.

When the results appeared, I was astonished to see that many of the deals offered were touting huge savings of several hundred pounds. How can this be, my dad puzzled, when they have been fixed for a couple of years, their usage hasn't changed and prices in the mean time have risen unabated?

The reason is this.

When you put your current deal in, you think that this is what the sites will be comparing new deals against. This is, however, not the case. If you are currently on an expiring fixed rate, they actually compare deals with the extortionate variable tariff you revert to when your fixed rate expires. You know, that tariff you probably wont ever be on. The only way you would save the money the sites claim is by being on that variable tariff for a year.

What these sites do not make clear is that whatever deal you switch to using their site, you will be paying more than you are at the moment. None of the energy suppliers are cutting bills, so comparison sites stating you will achieve outrageous savings by switching to sponsored tariff X or Y is tantamount to mis-selling.

I am of the belief that many people are being misled by this. One friend of mine switched and then went and bought something with the two hundred pounds they thought they had saved. Big mistake - they were actually paying more for their energy than they were on their previous deal; the comparison site had compared the latest deals with a variable rate they were never actually on.

Because people with a good reputation such as Martin Lewis are constantly pushing these sites people believe trust the accuracy of the numbers because they assume Mr Lewis has done the homework for them. Not the case. When using comparison sites, if you want to know what the impact on your current monthly outgoings will be you won't get that from any of them; you have to calculate it yourself.

Not quite sure I believe what you are saying.Why do they specifically ask what tariff you are on at your present supplier.If they are comparing it with the variable they wouldn't need to know this.

macman

What they compare are the currently available tariffs for the next 12 months, against what you will be paying for the next 12 months if you do nothing and move onto the default tariff. Which is exactly what you need to know.
Since your current tariff is not available for most of the next 12 months, and you already know what it costs, what is it's possible relevance?

jem16

BlackpoolMoneySaver wrote: »

What these sites do not make clear is that whatever deal you switch to using their site, you will be paying more than you are at the moment. None of the energy suppliers are cutting bills, so comparison sites stating you will achieve outrageous savings by switching to sponsored tariff X or Y is tantamount to mis-selling.

I've just done comparisons for both my parents and myself.

Energyhelpline make it clear that the comparison is against the tariff that you are likely to be put on and says that it has done this because you are within 2 months of the end of the fixed tariff.

It also gives you the choice of comparing with the tariff that you would be put onto or comparing with your current tariff.

Energylynx compared it with the tariff I am currently on and about to finish. It was easily checked by clicking the More Info button.

Perhaps it would be sensible when doing comparisons to read what is being given on the website. All the information is there but sometimes you need to read it a bit more carefully.

Cardew

Welcome to the forum.


IMO the point the OP makes is valid.

The subject has indeed been raised several times, but bears repeating for newcomers.


Us 'anoraks' appreciate that if you enter your current fixed tariff, the 12 month spend that, say, Energyhelpline, produce is the cost of the remaining period of your fixed tariff and the remainder on that company's(expensive) standard tariff. e.g. if you are on a fixed tariff ending, say, 28 Feb 2014, you will be given a figure for 11 days on the fixed rate and 354 days on the Standard rate.


However like the OP and his dad discovered, this isn't immediately apparent.


Frankly it is a mistake to try and work out how much you are saving in most cases; you only require the cheapest deal. So I just leave my current tariff to whatever the network defaults to, and enter my kWh. That produces the cheapest tariffs in price order.


P.S. on Energyhelpline you can find out what you were paying on you current fixed tariff.

thor

Although getting an indication on how much you save can be interesting, more important to me is how much you will actually pay. This will not depend on what your current tariff is so it is more transparent when it comes to choosing who you go with.