Energy switching sites misleading assumptions

Banana-Man

Dear MSE,

I would like to complain about the consumer association, Which?, for misleading consumers using their Switch with Which? website. The same issue goes for the uSwitch website and perhaps other comparison websites that are only interested in churning customers to earn commission.

I’ve just gone online to check if I could save money through switching my gas and electricity supplier and was pleased yet very surprised to see I could save over £250 a year. Wow! I was surprised as I had only changed a few months ago and didn’t think energy prices had dropped very much recently. However, when I looked into the calculations a fair comparison is not being given.

I want to compare prices on like-for-like basis i.e. for the period my current deal runs. I have already diarised to switch when my current deal expires so I’m not concerned or remotely interested in the gouging standard prices that might follow the “fixed deal” period.

What their calculation do is work out “savings” over a 12 month period. This factors in my supplier’s “standard” prices for the period between when my “fixed deal” expires and 12 months. This makes my current deal look very bad as the standard rates from my supplier are very high. However, the “fixed deal” rates are still currently competitive and are not worth paying the £40 exit fee.

I’m sure on the basis of these misleading calculations the sites will always be able to show a “£250” saving half way through any “fixed deal” once they assume the consumer is so stupid to roll over onto standard rates.

Well we’re not that thick but I didn't think we needed to check the comparison calculations. Isn't that their job?

I’m deeply disappointed in Which? for taking commission from utility companies (ultimately from us consumers) based on misleading calculations. I’m sure I’ve been conned recently as I switched a few months ago and paid an exit fee when probably I didn’t need to.

I was worried when Which? decided to start taking money from commercial organisations and this is exactly the sort of conflict of interest I was worried about.

[FONT=&quot]Anyone else noticed this? Or have I missed something?
[/FONT]

System

This is an often repeated complaint about the OFGEM-mandated method for licence holders and comparison sites to calculate savings.

The methodology is only in error for consumers on a fixed term contract with less than 12 months to run. Sites, such as Which, are required to use this methodology; however, some like MSE CEC and energyshop.com also show a simple annual cost comparison.

If you are unhappy, then email consumeraffairs@ofgem.gov.uk

Worth a read:

https://assets.publishing.service.gov.uk/media/54da24ebed915d514400000b/The_Energy_Shop_Submission.pdf

From The EnergyShop's submission to the CMA:

We were not the only ones who considered it misleading. Our view was backed by certain energy suppliers (EDF Energy), by consumer groups (MoneySavingExpert.com) and by distinguished academics and previous regulators (Stephen Littlechild, Sir Callum McCarthy, Eileen Marshall CBE, Stephen Smith, Clare Spottiswoode CBE)

Our latest research published in March 2016 (copy attached) shows a more disturbing situation. In the scenarios studied in our latest research we found the following;

• In one scenario an actual saving of £197 was quoted, on average, as £536. This is £340 (173%) more than the customer will actually save.

• In the other scenario, an actual saving of £6.35 was quoted as £492. This is £486 (7646%) more than the customer will save.

• In one scenario all sites quoted a saving that was greater than the customer’s current energy bill. Clearly an implausible and absurd situation.

• Some sites showed savings that were over 8000% more than was achievable.

Any methodology that can lead to a customer being quoted a saving that is greater than their bill is clearly ridiculous and needs to be urgently addressed. It is not just flawed and dangerous. It will undermine consumer confidence which runs counter to what many of the CMA proposals are trying to deliver.

Banana-Man

Thanks Hengus,
I did try to google to find out if this had been flagged up previously but without any luck.
Thanks for your background info which explains why this is happening. Hopefully, they'll be able to change the methodology quickly to show savings over the remaining fixed period and then savings over a period beyond that. Until then, I think the likes of Which? should flag up a warning on their site to let consumers know this is an issue.

System

Banana-Man wrote: »

Thanks Hengus,
I did try to google to find out if this had been flagged up previously but without any luck.
Thanks for your background info which explains why this is happening. Hopefully, they'll be able to change the methodology quickly to show savings over the remaining fixed period and then savings over a period beyond that. Until then, I think the likes of Which? should flag up a warning on their site to let consumers know this is an issue.

There is nothing that I can find in the CMA report to suggest that DECC or Ofgem are minded to implement this change. The 'problem' is that an assumption has to be made as to what happens when a consumer finishes a contract. Many people do end up on their supplier's standard variable tariff because they forget etc. My personal preference would be to do away with the annual rolling 12 months projection, and just use a simple annual cost now and in the future comparison.

Sadly, with 70% of consumers on standard tariffs, headlines with £s of savings suits the Govt's purpose of promoting switching. I wrote to my MP about this two years ago and got a bland 'you do not understand reply'.

footyguy

Banana-Man wrote: »

... Until then, I think the likes of Which? should flag up a warning on their site to let consumers know this is an issue.

What someting like

WARNING
Our site complies fully with the rules & regulations that we are required to abide by in making comparisons.

We do not assume what you may do in the future as our crystal ball has clouded over. Therefore, we assume you will do nothing, and also assume no price changes are made by the supplier since again our cystal ball has couded over.

:cool:

Why are you complaining to MSE about Which anyway?
Wouldn't your complaint be better routed to the organisation that you are complaining about??? :huh:

Banana-Man

footyguy,

I initially flagged up the issue to Which? but have yet to receive their reply. I will let the forum know what they say. I'm hoping they come up with a sensible and constructive response.

I posted on the MSE forum to flag this up to other consumers that might find this interesting. I was unable to find other reports of this issue and turned to the MSE forum. As I originally posted, and as Hengus pointed out, this issue is not limited to Which but almost all the comparison websites.

I perhaps should not be too surprised about this sort of sharp practice from a commercial comparison website but had expected more from the Consumer Association.

I'll be using theenergyshop.com in future. They have a very informative warning on their results page. Although I have not gone through their calculations yet to verify that the savings they claim are accurate, their approach suggests I should get a more realistic estimation of potential savings.

System

Banana-Man wrote: »

footyguy,

I initially flagged up the issue to Which? but have yet to receive their reply. I will let the forum know what they say. I'm hoping they come up with a sensible and constructive response.

I posted on the MSE forum to flag this up to other consumers that might find this interesting. I was unable to find other reports of this issue and turned to the MSE forum. As I originally posted, and as Hengus pointed out, this issue is not limited to Which but almost all the comparison websites.

I perhaps should not be too surprised about this sort of sharp practice from a commercial comparison website but had expected more from the Consumer Association.

I'll be using theenergyshop.com in future. They have a very informative warning on their results page. Although I have not gone through their calculations yet to verify that the savings they claim are accurate, their approach suggests I should get a more realistic estimation of potential savings.

Use MSE Cheap Energy Club. The annual cost comparisons are 100% accurate and they share supplier referral fees.

Bark01

Not a definitive answer, but the prescriptive supplier license condition that covers personal projections is being removed and replaced with a principle. This was based on feedback from the CMA investigation. Ofgem released an open paper on it a few weeks ago.

I tried the find the principle but couldn't, but its something along the lines of 'suppliers must make it simple for customers to make an informed decision on which tariff is best suited to them'.

footyguy

Banana-Man wrote: »

...
I perhaps should not be too surprised about this sort of sharp practice from a commercial comparison website but had expected more from the Consumer Association....

Yes, terrible.

A commericial organisation abiding by the rules Ofgem have told them to apply.

Perhaps you should by the organisation a nice new crystal ball so that they will be able to tell what individual anonymous web users will do in the future.

Yeah, best to stick to sites that are not mentioned here on MSE, and particularly ones you believe flout the rules and think they may know what you may do in future (that's if they even know who you are)

:cool:

But thanks for bringing this to out attention. I'm sure it's never been mentioned on this site before.
In fact I'm sure even MSE Martin doesn't know about it which is why he offers the option on his own website.

Also thanks for bring to our attention a site that according to you does flout the rules, particularly since it is not even mentioned by this site either. I'm sure we'll all start using it instead on MSE Martin's site (or any others MSE Martin suggests here)

Banana-Man

Thanks Hengus!

I've just done a check to find I'd only be £3/year better off by switching. That sounds more like it!

Great stuff. Have signed up for a reminder should savings go up.

Banana-Man

footyguy,

Not long ago the Consumer Association was a charity with no commercial activities. I expect more from them. I think they should be more careful with their commercial activities as there is a clear conflict of interest when people are being misled and mis-sold.

If MSE Energy Club can do it then surely Which? can.

No crystal ball required.