Compare the market: Now it's compare the commission as websites come under scrutiny from MPs and Ofgem

• e-mail

Price comparison websites are usually the first port of call for millions of consumers hunting for low-cost credit cards and cheaper energy or insurance. But they are now under scrutiny. 

Here, Laura Shannon explains why. 

Scrutiny: Websites are under pressure to offer top deals 

What has triggered the probe?

Chief executives of the major price comparison websites – MoneySuperMarket, comparethemarket, uSwitch, Confused and Gocompare – were last week grilled by a panel of MPs sitting on the Energy Select Committee about how transparent their services are to consumers.

Why are they under the spotlight?

Because of concerns among many MPs and regulator Ofgem that consumers are not being switched on to the best energy deals.

Last week collective energy switching company The Big Deal published the results of a mystery shopping exercise showing that call centre employees of comparison websites had failed to highlight the cheapest energy tariff on the market. Instead, they recommended a supplier that paid them commission.

How do comparison websites make money?

Most suppliers pay commission averaging £30 per fuel (£60 for dual fuel) for every customer switching to them via comparison websites. For example, in The Big Deal’s mystery shop, it was found that uSwitch recommended a ScottishPower gas-only tariff despite six cheaper alternatives being available.

But aren’t these sites helping people to save money?

Yes. Essentially, these websites do a good job in helping people to compare prices for anything from energy and insurance to credit cards and loans. As a result, millions of people have saved significant sums of money each year since their introduction.

But consumers still need to be aware that these sites are commercial companies making profits of between £9.8 million (uSwitch) and £69.7 million a year (comparethemarket). This money comes from those companies listed on their websites that pay commission every time a comparison results in new custom.

So while helping people to get more for their money, they are also reliant on the big companies to fund their businesses through commission. Some critics say this points to a potential conflict of interest, which at the very least needs to be monitored.

Can I get money back if I didn’t get the best switch?

In most cases you will have saved money by switching, even if you did not save the maximum sum possible. Also, if you changed to an energy supplier with no exit charges you are free to switch again without penalty.

Anyone who switched through uSwitch and is concerned they were not told about the best deal can email complaints@uswitch.com. It says it will investigate whether customers have suffered a financial loss as a result of a switch and it will consider compensation.

What about insurance switching?

Last year, comparison websites were criticised by City regulator the Financial Conduct Authority for failing to provide clear enough information when it came to insurance quotes.

'Not the bad guys': Money.co.uk's Hannah Maundrell says concern could lead to people giving up switching

The worry was that customers were looking at headline prices alone for insurance, neglecting other key features such as the excess – the sum a policyholder must pay before an insurer covers the cost of any claim.

To ensure you are getting the right level of cover at the right price, read a guide to buying insurance, which can be found on our sister website thisismoney, then compare premiums.

It is also worth remembering that companies such as Direct Line and Aviva do not feature on comparison websites, preferring instead to do business with customers directly.

So, to ensure you consider a full range of options, get quotes from these companies as well as from switching websites.

Gocompare is the only price comparison website that is listed by the British Insurance Brokers’ Association as adopting a ‘best practice approach’ to insurance business.