MSE News: The easy way to navigate the energy market maze

Price comparsion sites do not make prices more transparent. They make prices more opaque because they all have their own deals that are the most important thing for them - making sure they switch you and not some other comparison site.

I switched using a Consumer Focus comparison website. Top of the table for my quote were nPower and Scottish Power but only because discounts for direct debit that were out of all proportion to the actual saving of paying this way were taken out of the annual cost for these tariffs in the tables even though the discount is not paid until after 12 months and then only if you have met all the conditions.

What this means is that someone very stretched financially will sign up for one of these tariffs since it appears at the top of the table, circumstances may change some time during the following twelve months, they will fall by the wayside with direct debits and loose their entire three figure discount altogether and end up paying more than if they had chosen a tariff with less risk.

Now the tariff I signed up for is no longer current, when I do a comparison on a Consumer Focus comparison table, I am shown my annual spend without the direct debit discount taken off so by showing what I am paying inflated they can suggest I switch again and earn another commission.

Transparent bills please Ofgem and get rid of all these middlemen - we should be able to read our own energy bills and compare for ourselves. Comparison sites are not going to delivery that.

"So you didnt read the information on the website you were using that tells you all about the discounts being paid at the end of the year?"

I did, I found it where it was hidden but I'm not thinking about myself, if you can understand such a concept. I'll most likely not have problems meeting a direct debit payment for 12 months plus.

I was thinking about the person that signs up for what was advertised as the cheapest tariff, the tariff that appeared at the top of the sales device that is a comparison table. They then through no fault of their own, fail a direct debit payment, say 10 months in. They loose well over £100 plus are charged probably by their bank, and are switched to an expensive tariff.

What I would consider as a customer who should be on as low as possible a tariff - lower than me for example - will actually be on a more expensive tariff and the comparison site walks off with the commission.

Comparison sites add to lack of transparent prices which according to well established economic theory:

"contributes to price discrimination, which can cause different customers to pay higher prices, an outcome that may be acceptable in some markets but may lead to undesirable consequences in others. For example, if the customers with the least bargaining power also tend to be those with the least ability to pay, such discrimination may be deemed particularly undesirable."

oakhouse13 wrote: »

"So you didnt read the information on the website you were using that tells you all about the discounts being paid at the end of the year?"

I did, I found it where it was hidden but I'm not thinking about myself, if you can understand such a concept. I'll most likely not have problems meeting a direct debit payment for 12 months plus.

I was thinking about the person that signs up for what was advertised as the cheapest tariff, the tariff that appeared at the top of the sales device that is a comparison table. They then through no fault of their own, fail a direct debit payment, say 10 months in. They loose well over £100 plus are charged probably by their bank, and are switched to an expensive tariff.

What I would consider as a customer who should be on as low as possible a tariff - lower than me for example - will actually be on a more expensive tariff and the comparison site walks off with the commission.

Comparison sites add to lack of transparent prices which according to well established economic theory:

"contributes to price discrimination, which can cause different customers to pay higher prices, an outcome that may be acceptable in some markets but may lead to undesirable consequences in others. For example, if the customers with the least bargaining power also tend to be those with the least ability to pay, such discrimination may be deemed particularly undesirable."

Where was it "hidden"?

Under the button that says "More info" by any chance? Hardly hidden when the website tells you where it is..

Dont get me wrong, I think the way companies pricing structures is out of control and the useless regulator does nothing about it.

But the comparison sites are not the enemy here, they are accurate when you put the right information in (and look at the information displayed on them)

Also, What tariff are you on and what website were you using??

oakhouse13 wrote: »

What I'm saying is that it is very difficult for people to know a year in advance if they will be able to meet a direct debit payment in order to receive a bonus offered at the time of signing up.

But you expect the comparison sites to assume that everyone wont be able to meet the direct debits and so not include those discounts in the predicted savings?

Any comparison site that is consumer focus accredited is bound by the consumer focus code of conduct. It is consumer focus that tells the comparison sites what they can and cant include..

If you select to pay quarterly most comparison services wont include prompt payment discounts (how do they know if you are going to pay promptly?) but if you willingly sign up to direct debit tariff then why shouldnt they assume that you are going to continue to pay by direct debit?

All the websites list the discounts associated with direct debits as "Direct debit discounts" (the clue is in the name) if people fail to pay by direct debit at any time then they will lose that discount, I have seen this mentioned on every comparison site I have used (and I would never class that information as "hidden")

If people cant be bothered to look at what they are signing up to when all the facts are there to look at and NOT hidden then thats hardly the fault of the site is it?

I simply dont understand how comparison sites ADD to the problem..

They cant make comparing prices much simpler, when was the last time you worked out what your usage would cost on around 70 different tariffs available from around a dozen suppliers with a notebook and pen, it would take you all day, I can put my usage into a website and get the answers as to who is cheapest with a few clicks..



Also, I'll go for third time lucky on this..

What tariff are you on and what website were you using?

oakhouse13 wrote: »

I don't know but according to Martin Lewis who has years of experience, it is change of circumstance that causes financial problems.

If you have 5 minutes, Lewis on what causes debt; the solicitor is not me:

http://www.gm.tv/videos/?vxClipId=1441_gmtv_9557

I don't see any reason to disagree, he has dealt with very many consumers in debt.

What I'm saying is that it is very difficult for people to know a year in advance if they will be able to meet a direct debit payment in order to receive a bonus offered at the time of signing up.

Irrelevant nonsense! If you are on a direct debit you are paying in advance - you are always in credit. If you lose your job or circumstances change then you know in advance - you adjust your subsequent useage to suit your new income.