Ofgem has today set the gold standard for energy price comparison websites with the announcement of its new Confidence Code.
The revised code requires accredited sites to meet tighter standards on how tariffs are displayed. This is so consumers can be confident that deals aren’t hidden from view. Sites will also have to list prominently which energy companies they have commission arrangements with, and make it clear that they earn commission on certain tariffs.
Comparison sites are currently the most popular way to shop around for gas and electricity – around 40 per cent of energy shoppers used a comparison site to compare suppliers at their last switch. Ofgem’s Confidence Code gives customers assurance that accredited sites are independent of suppliers, carry every tariff available in the market and meet higher standards of accuracy and reliability when showing tariff information.
Ofgem took on the Code from Consumer Focus in 2013 and has been examining whether it provides the right protections for energy customers. The previous version of the Code allowed sites to take users straight to a partial view of tariffs from suppliers paying commission to the site. Today’s changes will help customers make an informed choice when using an accredited comparison site. They are:
- Banning a default partial view. Sites must show all tariffs available in the market unless customers actively choose to select to see a smaller number of tariffs.
- Ending confusing language. The wording of any choice must be very clear to site users. Sites must test their messaging with consumers and be able to prove that it is clear and simple. If a site cannot demonstrate this, it will not be able to give customers a choice of view, and will have to show all tariffs. The wording of this choice must be approved by Ofgem.
- Making commission arrangements transparent. Sites must explain clearly that they earn commission on tariffs that customers can switch to directly through the site.
The new Code goes live at the end of March 2015. Sites that want to keep their accreditation and carry on displaying the Confidence Code logo must satisfy the new rules by that point, or Ofgem will withdraw its accreditation. Ofgem will keep the Code under review, to make sure it continues to provide a high level of consumer protection without preventing accredited sites from coming up with innovative ways of marketing energy deals to customers and keeping pace with changes in the energy market.
Rachel Fletcher, Ofgem senior partner, said: “Our market reforms have made it easier for consumers to pick out better deals and switch suppliers. There has never been a better time to switch – consumers can make savings of around £200 by switching. Comparison sites are a great place to start energy shopping, but customers need to feel confident that the sites are providing information they can trust. From the end of March, Confidence Code accredited sites will need to be more transparent with their users and I’d encourage them to meet these new standards earlier.”
Notes to editors
1. Ofgem took over the Confidence Code from Consumer Focus in 2013 and carried out a review and consultation on proposed improvements to the Code in 2014. The final decision and revised Code will be published by 30 January at the latest. The Go Energy Shopping website has a list of accredited price comparison sites.
2. Ofgem’s work on the role of third party intermediaries continues. In particular, we are examining:
- The merits of expanding the Code to allow sites that do not manage their own database and calculator to become accredited
- How to facilitate face-to-face sales
- Broadening the Code to cover collective switching service providers.
3. The Competition and Markets Authority (CMA) is carrying out a market investigation into the retail energy market. Part of this investigation and the potential remedies the CMA proposes may relate to the role of third party intermediaries in the market, including comparison sites. We will consider the CMA’s findings and proposals as part of any future work we do in this area and keep the requirements in the Code under review.
4. Why choose a price comparison service accredited by Ofgem’s Confidence code?
- Whole of market view: Accredited sites must make all tariffs in the market available to you to view. Non-accredited sites do not have to meet this high standard.
- Impartiality & reliability: The code means accredited sites act independently of suppliers, so customers can be sure that when they are presented with options and prices, these have been calculated and are displayed in a fair and unbiased way.
- Code requires sites to be independent of suppliers – in other markets suppliers own comparison sites.
- Ofgem requires that sites are subject to an independent external audit to ensure results can be trusted and are up-to-date.
- The Code governs how results are ranked and displayed, and ensures that enough results are displayed for a good comparison (at least 10)
- The Code requires sites to cover all payment methods (ie including pre-payment meters)
- Consumer Protection: Accredited sites must, for example, have an effective complaints procedure and be able to signpost customers to energy efficiency information and information about Government grant schemes which they could be eligible for.
For more information, please contact:
Kate Wilcox: 020 7901 7113
Chris Lock: 020 7901 7225
Claudia Cimino: 0203 263 2722
Out of hours media contact number: 07766 511470