September 17, 2020

Energy comparison sites lose 40% of deals due to greedy fees

The big comparison websites are attempting to change their colours (like chameleons!) as they adapt to compete with, or even claim to offer, energy auto-switching. But, is the traditional commission-based business model really able to offer regular market checks and switches to the best deals?

Energy comparison site chameleon changing colours to adpat to new energy auto-switching technology

Some comparison sites have lost almost half the suppliers they worked with 6 months ago.

As part of Ofgem’s Confidence Code Price Comparison sites have to show a list of the suppliers they have commission agreements with, ie: those they will help you switch to.

For some of the sites this list has shrunk by half in the last 6 months as supplier after supplier has realised they can no longer pay the ever-increasing amounts of commission requested by the comparison sites and make a profit.

The profits of the Big 6 Suppliers may still be hundreds of millions of pounds, but many of the newer suppliers, especially those who offer the best deals to consumers, are making small profit margins as they try to win new customers in what is an incredibly competitive market.

So, if a Comparison site can now only switch you to less than half the suppliers on the market is their best deal really a good deal? We’ve seen results where the best deal shown isn’t in the Top 10 of the best deals available in the market!

Suppliers are paying switching sites up to £100.

Energy supplier Octopus state on their YouTube channel that the commission they pay comparison sites per switch is a similar amount as their referral scheme, which is £100. That's a lot of money which could surely be put to better use, for example lowering tariffs, supporting the development of sustainable energy or improving customer service.

The main comparison sites and some of the new auto-switching services make a big thing about their service being free to use, but given this means suppliers are paying them commission - which limits how many suppliers they can switch you to, limits how often they will switch you and limits the amount of money the suppliers can invest on other activities - is being free really a good thing?

Are all switching sites really working in your best interest?

Flipper thinks to truly offer consumers the best deal for them, energy auto-switching needs to be honest and completely impartial.

Having agreements with a limited list of suppliers is not truly impartial. Saying that tariffs are checked ‘regularly’ or ‘frequently’ is not clear or transparent. Saying that customers can save ‘Up to’ or that ‘10% saved’ is not clear or transparent.

Flipper are urging consumers to look beyond the old, established, ‘free’, commission model, before deciding which service offers you the best value. Flipper charges an annual fee, but this goes towards finding you the best deal from the widest possible number of tariffs every month, with our members seeing an average saving of £385 when they are flipped for the 1st time.

That is what true energy auto-switching should be offering.

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