MoneySupermarket, the Ofgem investigation and Martin S Lewis

edited 9 June 2015 at 10:14AM in Martin's Blogs & Appearances & MoneySavingExpert in the News
6 replies 4.2K views
As there doesn't appear to be any official thread created yet to 'have your say' on the article published by MSE Martin yesterday
http://www.moneysavingexpert.com/news/energy/2015/06/-moneysupermarket-the-ofgem-investigation-and-me
I hope no one minds me starting one.

Now I'm no fan of the Sun, but in MSE Martin's response article, he states:


Ofgem the energy regulator has asked for information from the MoneySupermarket group (which MoneySavingExpert is a part of) by sending what's called a Section 26 notice.


I wanted to just explain to you briefly what this actually means, and how it works, as, certainly judging by The Sun piece today by its former editor Kelvin MacKenzie, there is widespread ignorance.
  1. What is the investigation about? Here's the info from the Ofgem website.

    "Ofgem has opened an investigation into whether two or more companies providing a supporting service for the energy industry have breached competition law. Ofgem's investigation includes whether two or more parties have shared information on the commission rates they charge to energy suppliers.

    "For the avoidance of doubt, this investigation does not affect consumers' ability to use switching sites to get the best energy deal. The fact that we have opened this investigation does not mean there has been a breach of competition law."
  2. What exactly is Ofgem looking for? I don't know, any more than anyone else who has read the info above, ie, "have two or more parties shared information on commission rates they charge to energy suppliers?"

    Section 26s don't charge anybody with doing anything, in essence they are info fishing exercises to see what's going on, and if anything it thinks is wrong has been done.

    It is just a big demand for a mass of documents and data – so Ofgem can collect evidence. Only it knows exactly what it's looking for – then it can decide whether anything has been done wrong. As it states,"the fact that we have opened this investigation does not mean there has been a breach of competition law".
...

Well, allow me to attempt to dispel some of the ignorance that MSE Martin alludes to.

A Section 26 Notice in this instance relates to such a notice given under Section 26 of the Competition Act 1988.

Section 26 commences:
26. Powers when conducting investigations.

(1)For the purposes of an investigation under section 25, the Director may require any person to produce to him a specified document, or to provide him with specified information, which he considers relates to any matter relevant to the investigation.

(2)The power conferred by subsection (1) is to be exercised by a notice in writing.

(3)A notice under subsection (2) must indicate—
(a)the subject matter and purpose of the investigation; and
(b)the nature of the offences created by sections 42 to 44.

...
(my highlighting)
The full wording is available here:
http://www.legislation.gov.uk/ukpga/1998/41/section/26


Section 25 of the same act also gives a broad indication :

25. Director’s power to investigate.

The Director may conduct an investigation if there are reasonable grounds for suspecting—
(a)that the Chapter I prohibition has been infringed; or
(b)that the Chapter II prohibition has been infringed.
http://www.legislation.gov.uk/ukpga/1998/41/section/25

Chapter I prohibition relates to 'Agreements etc. preventing, restricting or distorting competition.'

Chapter II prohibition relates to 'Abuse of dominant position.'

(Further details are available in the Act linked to above)

From the Ofgem link given by MSE Martin in his article, it would appear the notice, which was issued back in February this year, relates to suspecting that the Chapter I prohibition has been infringed.

Replies

  • canterswestcanterswest Forumite
    364 Posts
    More reporting Martin Lewis is unable to report about


    http://blogs.channel4.com/siobhan-kennedy/confused-price-comparison-websites/1097


    None of MSE's so called reporters either.
  • boneofoboneofo Forumite
    57 Posts
    Ninth Anniversary 10 Posts Combo Breaker
    Its was inevitable once a corporation got hold of MSE. For me, evidence of problems came to light when MSE advertised money supermarkets epic energy switch which conflicts with MSE cheap energy club. It makes no sense for essentially the same company to compete with itself.
    Its laughable anyway that Ofgem are investigating as they do nothing. They won't even examine the liars at the ombudsman services.
  • edited 13 June 2015 at 12:01PM
    canterswestcanterswest Forumite
    364 Posts
    edited 13 June 2015 at 12:01PM
    Ofgem might take no action, but according to Which? quoted in the Independent, the Competition and Markets Authority might be set to investigate price comparison sites.

    http://www.independent.co.uk/money/spend-save/comparison-sites-face-accusations-of-pricefixing-and-hiding-better-deals-from-british-consumers-10317387.html

    Purchase decisions are made on comparison sites so your consumer rights should start where you make your purchase and you should know what sites are paid for selling you a product. It is usual for providers to offer tiered commission to incentivise comparison sites to reach targets which complicates displaying a price to the consumer. Providers may also do special deals with websites so knowing what the provider is paying for might be relevant.

    Icelandic savings banks offered large commissions to comparison sites and highest interest to savers so topped tables. If consumers had seen that banks never heard of before with no UK physical presence were paying huge commissions like £60 compared to a UK hight street chain paying say £10 compared to NS&I paying nothing, they could have made a better evaluation, checked more widely than simply going by a best buy table, and not cost all of us billions in clearing up the mess.

    Comparison sites that allowed Icelandic banks a free platform, paying only for savings accounts opened so no upfront payment, should have been responsible for compensation, if they took excessive commissions.

    Same risky scenario happens time and again on a smaller scale so Ofgem, the CMA and Financial Conduct Authority all need to investigate and whenever comparison sites are the first link in a sales chain, whether its energy or savings, risk needs to be appropriately regulated.

    Note - a recent court ruling that credit brokers can be liable for compensation for misleading consumers might be relevant to comparison websites that are licensed credit brokers advertising credit.
  • dollydivadollydiva Forumite
    302 Posts
    Guess I'm biased because every time I've switched using The Energy Club it's resulted in bigger bills and even BEFORE I've switched I always get an email saying that 'cheaper' are available. Already? Even though you said THIS was the cheapest and its now days later?

    Yeah...cheapest of the tariffs you SHOWED me.:mad:
  • MSE_Dan_LMSE_Dan_L MSE Staff
    655 Posts
    dollydiva wrote: »
    Guess I'm biased because every time I've switched using The Energy Club it's resulted in bigger bills and even BEFORE I've switched I always get an email saying that 'cheaper' are available. Already? Even though you said THIS was the cheapest and its now days later?

    Yeah...cheapest of the tariffs you SHOWED me.:mad:

    Hi Dollydiva

    I would like to clarify on this point that Cheap Energy Club has never hidden any tariffs irrespective of whether you're able to switch to the company or not through the site.

    Our alerts process is designed so that we don't email you when you've 'a switch in progress' through our site, so the scenario you describe shouldn't happen. I wonder if maybe you've more than one account with us which might be confusing?

    We built Cheap Energy Club to constantly monitor your energy tariff. Energy suppliers constantly launch new tariffs, plus prices can rise and fall so it isn’t unusual for you to receive a savings alert email a few months after switching.

    How often you switch depends on what kind of a MoneySaver you are. Some people like the thrill of knowing they’re always on the very cheapest tariff, others are content to know they’re not hugely overpaying. If you want to receive fewer alerts, consider setting your trigger figure higher. To do this, simply login to your Energy Club Account and go to the monitoring information section.

    I hope this exaplanation helps.
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