Customers 'Duped' By Energy Switching Deals

System

The EDF view on price comparison websites (PCW):

Independent switching service

Given the commercial incentives that lead to PCWs and other brokers not providing comprehensive and transparent comparisons, EDF Energy believes that there is a need for an independent and impartial service to act as a benchmark for consumers.

EDF Energy has called on Ofgem to sponsor an independent switching service, similar to that provided by the Australian Government. The service should be available through the internet but, most importantly for vulnerable consumers, also by phone and post. This service should be run on a not for profit basis, paid for by energy suppliers to co-exist alongside commercial sites.

All submissions made to the Committee are available on the Cabinet Office website and make for very interesting reading - particularly, the potential for comparison sites to provide mis-leading savings information.

Consumerist

matelodave wrote: »

If a site wants my full address, e-mail or even telephone number I usually reject the site or put in something fictitious. There's no way I'm offering up my info unless I know what it's being used for and as far as I'm concerned an energy supplier doesn't need to know my actual address - only a post code, e-mail or phone number for me to get tariff info.

The argument used by the comparison sites is that the supplier does need the full address and the comparison site merely passes it to the supplier when initiating a switch. It shouldn't be necessary to submit a full address unless you actually want to switch.

Cardew

kevbev321 wrote: »

I've actually just had a response from Martin about this, see below.

http://blog.moneysavingexpert.com/2015/02/06/an-open-letter-to-the-energy-select-committee-about-comparison-sites/

I cannot think many people, even the most naïve, are not aware that comparison websites exist to get commission.


However Martin's letter to Mr Yeo misses two important points:


1. Deliberately overstating the projected savings by making the assumption that those on a fixed tariff will switch to, and remain, on the expensive standard tariff when their fixed deal expires.


2. Attempting to get customers to switch to tariffs that 'we can switch you to today' - thus eliminating those tariffs that don't attract commission, which might well be cheaper for the customer.


Entering some very low consumption figures into a site and requesting 'all tariffs' produced Ebico as the cheapest.


However selecting 'a tariff we can switch you to today' and the website came up with a tariff approx 25% more expensive.


Of course they cannot switch you 'today' - it still takes weeks!

Sledgehead

facade wrote: »

Obviously, you will all think me witless, naive, backwards thinking, and a Dinosaur, but as the electricity comes from the same powerstation, along the same wires, how come we can't all just pay the same price per unit from the same company, and do away with all the middlemen making money for the shareholders?

Then The Government could simply set the prices.


Just wishful thinking.......

Be careful what you wish for :
http://www.energyanalyst.co.uk/an-analysis-of-coal-generation-in-the-uk-and-gas-market-interaction/

Note this diagram of inflation adjusted coal prices. The 1979 price spiral happens under full nationalisation at a time of huge Union power. Margaret Thatcher came to power in that same year. She broke the Unions about 5 years later.



Of course, this is not the whole story, as since the last state-set spike in energy prices, wages have grown in real terms:
http://touchstoneblog.org.uk/wp-content/uploads/2013/12/HMT-1.jpg

So the current run up feels nothing like that union inspired spike, as heating was a bigger chunk of peoples' take home pay.


Interestingly, in Jacques Peretti's mini-series, The Super-Rich and Us, Mr Peretti reveals data showing the 70's to be a high point of egalitarianism, with wages of bosses being only a small multiple of the workers. The chart link below tells the same story:
http://touchstoneblog.org.uk/wp-content/uploads/2013/06/GD-Wage-chart1.jpg

To hear Union bosses of the time, like Scargill, you'd have thought the absolute opposite was true: they refused to recognize their good fortune and instead went on the rampage, demanding inflation busting wage rises. That's what's behind that spike you see in coal prices - the spike other ordinary people were having to pay. The result: people lost all sympathy with the "working man" and their unions. And Maggie was invited to bust them up.

Sledgehead

I must admit I'm split over this one:

On the one hand it's a mystery to me why people expect PCW's to be the purveyors of gospel truth. They give a guide, no? You use a couple or three of them, no? Just like you would get three quotes from tradespeople, right?

On the other hand, what poetic justice, to see Martin hoisted by his own petard. All those years of childish slogans: slap, slash and bash, or is it suck, muck and f - no that weren't it, but you know what I mean. The ol' J'accuse the banks, j'accuse the utility companies, j'accuse the insurers, when his muckers in the PCW game, who he took millions off of when he sold this site, stand accused of the self-same sharp practices. At least the banks selling PPI had it in their small print.

Let me share with you a lil insight about good old Martin. When he was just another face in the crowd and MSE was just another blog, he started cruising around other forums, hoping to net some new members. One site he cruised was housepricecrash, a place I then frequented regularly. When he laid out his plans for MSE I made it pretty clear to him that HPC was probably NOT fertile ground for his patter, because, and here's the irony, HPCers were and still are money savers. I pointed out what he was peddling was money spending expertise. I also told him that that is what he should call the site.

Well, I have to tell you he wasn't too happy about my contribution. And here's what he told me; he said nobody would want to be given advice on how not to spend - ie actually save.

So here we are years later and what do we find. Walk up to a bod in the street and ask them if they like saving and they'll prolly say "yeah, I saved 20% on these blahs and I'm gonna spend that on a manicure (or some such rubbish)".

In other words, MSE was launched on a fib. It never was about money saving , but about money spending. But guess what? The public not only fell for this spin, they wanted so much to fall for it, they even adopted the lexicon of MSE themselves. Yep, they want to believe. They want to believe they have saved, just like an obese person wants to believe that Ben & Jerry's tub they are scoffing is low fat. Not because they want to get thinner, but because they want to eat even more ice cream. And Martin's secret to success and fortune was that he knew that all along.

Let's face it people, you ain't no savers, and if Martin or the PCWs have mislead you, it's because you desperately wanted them to.

victor2

Sledgehead wrote: »

....
On the other hand, what poetic justice, to see Martin hoisted by his own petard. All those years of childish slogans: slap, slash and bash, or is it suck, muck and f - no that weren't it, but you know what I mean. The ol' J'accuse the banks, j'accuse the utility companies, j'accuse the insurers, when his muckers in the PCW game, who he took millions off of when he sold this site, stand accused of the self-same sharp practices. At least the banks selling PPI had it in their small print
....

Interesting dialogue.
I'd like to think MSE has contributed significantly to my attempts to reduce the cost of living, and that I've passed some of those useful experiences on to others.
I also believe I take nothing at face value, and do considerable research into most significant expenses before parting with any cash.
MSE's decline from its original ethos since Martin sold it is clear for anyone who was using MSE before the sale to see. Many of the old regular posters have disappeared. IMO it is now like the comparison sites being discussed in this thread - useful as a pointer, but take the bait, hook, line and sinker, as they say, at your risk...

canterswest

[QUOTE=victor2;67836393take_the_bait,_hook,_line_and_sinker,_as_they_say,_at_your_risk...[/QUOTE]


The problem is that we don't really know if PCWs are good or bad for the economy. If they are misleading consumers into bad decisions, then they are no different to a bank that sells bad products and we know the costs are not limited to simply the consumers who took out the Icelandic savings bank account or used an online FOREX broker for £70 more holiday money.


Consumers have a voice and are compensated but have we gone so far as consumers will take out a too good to be true product at the top of a PCW best buy table, knowing they can mount a compensation claim if it fails for a win win situation?


Anytime that happens, it is very costly for all of us.

System

victor2 wrote: »

Interesting dialogue.
I'd like to think MSE has contributed significantly to my attempts to reduce the cost of living, and that I've passed some of those useful experiences on to others.
I also believe I take nothing at face value, and do considerable research into most significant expenses before parting with any cash.
MSE's decline from its original ethos since Martin sold it is clear for anyone who was using MSE before the sale to see. Many of the old regular posters have disappeared. IMO it is now like the comparison sites being discussed in this thread - useful as a pointer, but take the bait, hook, line and sinker, as they say, at your risk...

All very good points. Unfortunately, many people fall into the trap of believing everything that is printed on this site. Consumer protection is needed to ensure those who use comparison sites are not mis-led. It cannot be right that this site shows a potential switch saving of £200 whereas another one, such as theenergyshop.com, might show an additional cost of £15 for the same product. Why - because comparison sites are allowed - even tacitly encouraged by OFGEM - to use a flawed method of calculation.

daveyjp

Hengus wrote: »

OFGEM has also banned energy companies from offering cashbacks.

There are ways around that. M&S Energy still give cashback in the form of vouchers. £100 a year.

canterswest

Something which MPs are taking no account of is that it could be very dangerous if PCWs are forced to display all tariffs with cheapest at the top. This is what they did with Kaupthing Edge and Icesave which offered too good to be true savings rates, plus £50 commission to PCWs. There are already cheap tariffs at the top of PCW tables based on unfair competition. It would not surprise me if we have a company build up large amounts from customers in direct debits, directors withdraw or move money elsewhere, the company then has to buy enough gas and electricity to supply customers but it says it cannot afford to, it has been losing money it says, wholesale prices have gone up and are now more expensive than the fixed rates it signed customers up to, and it goes bust.


The letter from EDF to the Energy select committee contradicts the oral evidence given by PCWs. This is something we need the press to investigate.


Q8 Chair: Has the default position on your side always been to show all available deals?
Peter Plumb: No—

Q9 Chair: Right, that is clear. So in the past you have not shown customers all available deals, including some that are better than the ones on which you are earning commission. So was the reason you concealed the better deals from your customers because you were earning commission, yes or no?
Peter Plumb: No, there are three reasons.

Q10 Chair: What was the purpose in that case of concealing a good deal from a customer?
Peter Plumb: There are three reasons. Some providers do not want the volume, like Flow energy. They do not want to be on a price comparison table because they cannot cope with the volume and actively do not want to be linked through. Secondly, some providers—some of the Big Six—do not want to show their existing customers because they do not have the infrastructure in place. Other tariffs they can switch to today, they do not want to be on MoneySuperMarket tables and—
Chair: Is the purpose of your site to help the Big Six screw their customers?
Peter Plumb: No, the purpose of our site is to help millions of customers break through and finally understand how they can switch energy and save themselves at least £200 a year by having a transparent view into the market and finally have the confidence, and the tools, to be able to move from tariffs they have been on for years to be able to finally switch to other providers and help rich and poor, old and young, to save money on their household bills.
http://www.parliament.uk/documents/commons-committees/energy-and-climate-change/06f%20-%20Letter%20from%20EDF.pdf