Energy auto-switching sites don’t always give users the best deals with some paying £70 a year MORE

Energy auto-switching services are not always giving users the best deals, with some comparing only 15 out of around 70 possible energy suppliers, new research has revealed.

Even though the sites claim to switch customers to the best deals on the market, some end up forking out up to £70 a year more than if they had researched and switched themselves, according to Citizens Advice.

It added that some auto-switchers were providing inaccurate or unclear information that made it difficult for customers to make informed choices about using the services, including listing energy firms that had already gone out of business.

The charity believes that the issues uncovered are due to the fact that third party intermediaries – which includes auto-switchers, price comparison sites and other services – in the energy market are not currently regulated.

Citizens Advice is calling on auto-switching services in the energy sector to be regulated

It said it wants the Government to use the upcoming energy white paper, which is due at the end of March, to make sure consumer protections are fit for the future and bring them into line with other markets like insurance.

As new types of TPIs emerge, including ones that manage smart appliances and electric vehicle charging, Citizens Advice said reform is ‘essential’.

Citizens Advice said the current lack of regulation of these energy services means people can face serious problems that are difficult to resolve. 

Cases seen by the charity of problems caused by TPIs include:

• Auto-switchers failing to cancel a switch, leaving customers stuck with a supplier they are unhappy with or facing exit fees

• Bill splitting companies failing to pass on communications from suppliers, leaving people in unexpected debt

• Consumers in vulnerable situations losing some of the services they rely on as a result of being switched without warning

It is asking for the same level of protection that those who buy insurance through a price comparison website receive.   

Insurance customers get more protection when using certain services than energy switchers

Insurance customers get more protection when using certain services than energy switchers

TPIs operating in insurance and other financial services sectors are regulated by the Financial Conduct Authority which means people can resolve complaints via an ombudsman, firms are required to treat their customers fairly and vulnerable customers have more protections.

Toto Energy 

The defunct supplier, Toto Energy, has been raised as an example of why reform is urgently needed in the sector.

Customers using auto-switching sites were still allowed to be switched to Toto with some even offering exclusive deals to do so, despite issues with the firm already being outlined. 

Many customers had already complained about the service whilst it was still functioning and Trustpilot had issued a warning to the supplier after a manager at the firm appeared to ask other staff to leave five-star on the site. 

George Chalmers, CEO of Migrate, said: ‘In the months running up to their collapse, we noticed numerous red flags and made the decision to remove Toto from our panel altogether. 

‘All the warning signs were there, and if they were obvious to us, then they must have been obvious to others as well. Toto were even awarded 40,000 customers a few months prior to their insolvency after the collapse of another supplier, Solarplicity.’

Citizens Advice is calling for the same approach in energy, overseen by Ofgem. The charity believes the approach would ensure a good balance between consumer protections and ongoing innovation.

The charity believes reform is well overdue – the Competition and Markets Authority first called for these reforms in 2017 – and urgently needed.

Dame Gillian Guy, Chief Executive of Citizens Advice, said: ‘The lack of regulation leaves people facing potentially serious problems and a lengthy and difficult path to resolving them. 

‘As more and more people use these sorts of services it’s essential that better safeguards for customers are put in place now.

‘The Government has an opportunity in the upcoming energy white paper to fix current problems and make sure the right consumer protections are in place as the UK moves to a zero-carbon future.’

The first autoswitching service launched in 2016 with around 300,000 people using these services last year. 

This has now increased to 6.9million people using a third-party service last year to compare or switch their energy supplier with the market expected to grow even more in the coming years. 

Ed Dodman, of the Energy Ombudsman, said: ‘As the ombudsman we think all consumers should be able to use our service if they have an unresolved complaint, no matter how they choose their energy deal and supplier.

‘We are keen to work closely with the sector to find a way forward that ensures there is better protection for consumers and microbusinesses who use auto-switching services, price comparison websites, energy brokers and other third parties.’ 

Those using auto-switching sites should receive further protection, the charity has said

Those using auto-switching sites should receive further protection, the charity has said

What do the auto-switching sites say?  

A number of auto-switching sites have spoken out about the proposed reforms to the energy sector with many agreeing that it is necessary.  

Llewellyn Kinch, co-founder of Switchd, said: ‘We’re very pleased to see Citizens’ Advice tackling the issues with free comparison sites and auto-switching services. 

‘Consumers clearly feel misled and unsupported by third party intermediaries.

‘We hope that this report will lead to more regulation on how transparent TPIs must be both on how they make their money and whether they’re truly getting you the best deal.’

George Chalmers, chief executive of Migrate, added: ‘The UK energy market is fundamentally broken and it has consistently failed to effectively help and protect its most vulnerable customers, so it’s great to see Citizens Advice highlight these people in their report. 

‘This obsession with cultivating large panels and pushing the cheapest deals regardless of quality of service allows suppliers to win customers by gaming the system, and more often than not, it’s these suppliers that go insolvent.

‘Rather than pushing these tired old narratives, third parties need to actively engage with their panels to ensure that they’re only switching people to suppliers that provide a good service for a good price.’ 

Alex Dickson, head of research at Switchcraft, said: ‘As with any new industry, not all players are getting it right all of the time. 

‘And after decades of ring-fencing customers, energy suppliers are now coming to terms with a new more flexible switching system. 

‘New regulation aimed at upholding high standards of service during this transition can only be a good thing for consumers.’

Citizens Advice calculated the potential saving of £70 a year by calculating the difference between the cheapest tariff that companies were offering on a given day, compared to the cheapest tariff available on that same day. 

Savings were calculated based on medium energy use under Ofgem’s Typical Domestic Consumption Values on a dual fuel tariff, and included charges by autoswitchers where applicable. 


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