Last week concerns emerged about the relationship between AgeUK and EOn when it was revealed that AgeUK had received substantial commission payments for switching customers energy supply to EOn. The press questioned whether the commission payments lead AgeUK to promote EOn deals even when they were more expensive than other offers.
This points a deeper problem at the heart of the energy market and the role that commission payments currently play.
Price comparison websites claim to be free. But most customers intuitively understand that there is no such thing as a free lunch. Comparison sites have to spend a lot of money to build and maintain their websites, collect price information and for the wall to wall advertising involving movie stars, opera singers, robots and animals.
So how do they make money? They charge suppliers who they switch customers to. The recent inquiry by the independent Competition and Markets Authority reveals that they are typically paid up to £35 for every customer they switch.
Somebody has to pay for this and as the CMA found that all the suppliers make healthy profits it is clear that the tab is ultimately picked up by customers through more expensive energy prices.
Does this matter? Suppliers have to advertise as well to attract customers. And price comparison websites have undoubtedly made it much easier for customers to compare prices and get lower prices.
But how can customers be sure that the comparison sites will act in their best interests? Will they include prices of suppliers who don’t pay commissions? Will they be tempted to direct customers to suppliers that pay the highest commission and not those offering the cheapest prices?
At Flipper, we are trying to do things differently. We don’t and will never accept commission payments from anyone.
We simply ask our customers to pay us a small fee so we can always offer them an independent and objective service that finds the best deal for them. It also allows us to provide a simple and hassle free service that keeps scanning the market and getting our customers the best deal automatically. So once you sign up you know we will always make sure you are not paying too much for your energy.
And if we are successful we will drive lower energy prices because suppliers will no longer have to pay these high commissions to attract customers. Bad news for Hollywood movie stars, opera singers and robots. Good news for energy customers.