The competition watchdog’s proposals to reverse changes to a policy for energy price comparison websites (PCWs) “will undermine trust and competition”.
That’s the warning from MPs who are urging the government not to implement the recommendation.
The Competition and Markets Authority (CMA) published its final report last month following the two-year energy market investigation, in which it proposed Ofgem to remove the ‘Whole of the Market Requirement’.
It is part of the Confidence Code which requires PCWs to include price comparisons for all domestic tariffs.
The Energy and Climate Change Committee’s (ECC) concern follows its warning PCWs misled consumers into switching to deals that weren’t the cheapest on the market.
The CMA argues “any adverse unintended consequences arising from the removal of the Whole of the Market Requirement will be mitigated by Citizens Advice’s market-wide non transactional price comparison tool”.
However, the ECC believes removing that policy would allow PCWs to show a smaller range of tariffs to consumers.
In a letter to newly-appointed Energy, Business and Industrial Strategy (BEIS) Minister Greg Clark, ECC Chair Angus MacNeil said: “It would be a retrograde step to go back to a situation where websites conceal deals that do not earn them commission. Price Comparison Websites are now one of the main ways consumers switch supplier. Consumers must be able to trust these websites to help them switch to the best energy deals available on the market.
“Ofgem referred the energy market to the CMA for an investigation in order to ‘clear the air’ after public trust in the energy market had collapsed in 2013/14. That trust is gradually returning as Ofgem’s latest survey of public attitudes to the energy market shows. This remedy risks turning that tide and eroding trust afresh.”
He added the remedy could also have a “detrimental effect” on competition as it is harder for smaller suppliers to afford to pay the same rates of commission as the Big Six companies.
The letter went on: “It would be counter-productive and ironic if the CMA investigation led to a remedy that inadvertently reinforced the dominance of the Big Six and made it harder for new entrants to reach potential customers.
“We urge you not to implement a recommendation that could undermine consumer trust and disadvantage new entrants”.
The government said it will “carefully consider” the letter and will be issuing a formal response on the CMA recommendations in due course.
A BEIS spokesperson added: “The CMA has recommended that price comparison websites should compete against each other to offer their customers competitively priced deals. Competition is key to delivering an effective energy market and driving down prices for bill payers. It’s important that industry work together to encourage consumers to switch supplier.”