The government should look to bring digital comparison tools (DCTs) like price comparison websites into ‘into regulators’ scope’ in energy and telecoms, the Competition and Markets Authority (CMA) has recommended. It said, “Where regulation of suppliers’ sales and marketing activities is judged necessary, as in energy and broadband, there is a case for applying similar rules to other firms doing these activities – such as DCTs. This would create a level playing-field for all firms performing a similar function – ie selling energy or telecoms services.”
The CMA also noted that consistency between regulators would become more important, especially as consumers bought more bundled household services.
The recommendation came following a CMA investigation into DCTs that generally found them useful for most consumers. But the CMA reiterated its recommendation to remove ‘whole of market’ requirements from DCT, one of several interim changes it said would help build competition. It said that “At first sight, a requirement to show all suppliers might appear beneficial for consumers by creating ‘one-stop shops’ for energy and reducing the need to shop around. However, such requirements can undermine the benefits that DCTs can bring to consumers, because they weaken DCTs’ positions in negotiations with suppliers.” Such a requirement was a barrier to innovation, the CMA said.
Typically in the sectors examined there were competing DCTS but four or five accounted for most sales.
The CMA identified providing usage data as a barrier for energy switchers because it requires consumer effort. DCTs do not have access to usage information. Consumers either manually enter information from their bill or are required to provide login details for their current account, or are required to answer a series of questions on their property, household and lifestyle to estimate usage. The CMA said smart meters should improve the quality of captured usage information, by providing more timely and accurate data, compared to estimated bills or periodic billing, but DCTs will need access to this. This will be key to developing ‘concierge-type’ services.