ACCC is cracking down on Comparison websites (again)

At Bill Hero HQ yesterday we were delighted to see ACCC Chair, Gina Cass-Gottlieb, announcing that ACCC is taking a renewed interest in price comparison websites.

We are concerned that price comparison websites can mislead consumers in a number of ways ... We want there to be be accurate representations and disclosure of commercial arrangements by price comparison websites.

Too right. For far too long, the so-called 'comparison sites' have badly underserved consumers. They purport to help you find a better-priced deal, but in reality, they are thinly veiled sales channels for their 'panel' of participating retailers that pay them commissions

Follow the Money

There is a famous truism in media and online services that if you're not paying for a service, then you're the product.

If you're not paying for it, you're not the customer. You're the product being sold.

All you've got to do is follow the money and its easy to see who's buying what.

In the case of energy comparison sites, of course, it's the energy retailers who are the real customers. They pay commissions to the comparison sites in return for acquiring new consumers.

More broadly, the providers themselves have control over many of the sites that allegedly compare their products.

For example, research conducted by Bill Hero partner CHOICE finds that comparison sites are often owned or affiliated with the insurance companies they compare, with insufficient disclosure of the underlying relationships:

• Compare the Market is owned by Budget Holdings Limited, which, in turn, owns insurance giant Auto and General, the parent company of insurance brands like Budget Direct. 70% of the car insurers 'compared' by Compare the Market are owned by Auto and General.
• Choosi.com.au is associated with Hollard Financial Services. It's a major provider of life insurance and issues 11 of the insurance brands available on the site, while parent company Greenstone distributes four of the life insurance products.
• Compareinsurance has directors and shareholders in common with six of the travel insurance brands it compares.

In addition, there's significant consolidation in the sector – Compare the Market acquired iSelect in a transaction that the ACCC chose not to oppose back in 2022.

Compare the Market’s proposed acquisition of iSelect not opposed

The ACCC will not oppose Innovation Holdings Australia Pty Ltd’s (IHA) proposed acquisition of iSelect Limited (ASX:ISU).

Australian Competition and Consumer Commission

This ain't their first rodeo

This is not the first time that the ACCC has expressed interest in comparison websites. For example, it published The Comparator Website Industry in Australia report back in 2014:

The comparator website industry in Australia

This report has been compiled to provide industry, consumer groups and regulators with a better understanding of the comparator website industry in Australia and its potential impact on competition and consumer welfare.

Australian Competition and Consumer Commission

Since that time, ACCC has issued numerous proceedings against retailers and comparison sites, leading to significant fines and a number of 'enforceable undertakings' for comparison websites that were found to have breached the guidelines in different ways. In one of the highest-profile cases in October 2020, the Federal Court ordered iSelect to pay $8.5 million in penalties for making false or misleading representations about its electricity comparison service.

iSelect to pay $8.5 million for misleading consumers comparing energy plans

The Federal Court has ordered iSelect Limited to pay $8.5 million in penalties for making false or misleading representations about its electricity comparison service.

Australian Competition and Consumer Commission

iSelect admitted that ... it misled consumers by representing on its website that it would compare all electricity plans offered by its partners and recommend the most suitable or competitive plan, when this was not the case.
Actually, iSelect’s commercial arrangements with partner electricity retailers [meant] the recommended plans were not necessarily the most suitable or competitive.

In its Statement of Compliance and Enforcement Priorities for 2024-25, the ACCC has reiterated its focus on the corner of the commercial landscape that Bill Hero is most concerned with: "Promoting competition in essential services with a focus on telecommunications, electricity, gas and financial services."

It also included price comparison websites among its shortlist of priorities for the 2024-25 financial year ahead:

Consumer and fair trading issues in the digital economy, with a focus on misleading or deceptive advertising within influencer marketing, online reviews, in-app purchases and price comparison websites.

Bill Hero welcomes this policy priority.

Why are we so sanguine about the promise of intense scrutiny in this industry? It's because we're different and better than our so-called competitors, and we've pioneered a model that actually works.

Why is Bill Hero different and better?

Bill Hero is very different from the 'first generation' price comparison websites, whose butts we look forward to being kicked by the ACCC.

We've built a 'next generation' approach to energy comparison and procurement that turns the comparison business model and commercial economics completely upside down to deliver a user-pays and service-led model that lives or dies by the genuine value we can deliver to our true customers – energy consumers just like you. We call this 'Savings as a Service'.

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Not a subscriber yet? What are you waiting for! Never overpay for energy again! Bill Hero automatically compares every bill to help keep you always on the best priced plan.

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Here's why our Savings as a Service model is different and better than the commercial comparison sites:

• We transparently compare every plan from every retailer, market-wide—not just selected plans from the few retailers on our 'panel'.
• We do not seek or accept any form of commission, kickback, or inducement of any kind from the retailers whose products we compare.
• We do not artificially promote or highlight any retailer or product. We show every option based on its merits in a true side-by-side comparison.
• Our service automatically compares every bill for you against every plan from every retailer without you even lifting a finger. This means we do all the work to hold your retailer accountable on every single billing cycle and let you know whenever there's a better deal available.
• You set your 'Bothered Threshold', and we'll help you switch whenever you can save.
• We're funded only by our subscribers, energy consumers like you, so our only interest is to keep you happy by helping you always stay on the best-priced plan.

And we're even better than the official Government comparison sites, Energy Made Easy and Victoria Energy Compare. Like Bill Hero, the government sites do include every retailer and plan, which is a great start, but we offer additional service innovations for energy consumers that go well beyond what's available from the government:

• We've completely automated the bill upload and comparison process, so we monitor and compare every bill for our subscribers, not just once, but every time, so you can always stay on the best-priced plan
• We have a full GreenPower comparison offer
• We fully cover Demand Tariffs, the fastest-growing energy tariff type that adds even more confusion and risk to consumer energy bills.
• We're making it easier than you can imagine to actually complete your switch.

Consumers Demand better service

A key and fast-growing concern in the Australian retail energy landscape is the introduction of Demand tariffs to residential energy consumers.

Demand tariffs bring a new and potentially very punitive cost element into residential energy bills, where you get charged not only for the total number of kWh you consume, but also for the peak intensity of that consumption.

The peak demand charge gets applied across the entire billing period, so a momentary spike in usage can cause much higher energy prices for an entire billing cycle.

Demand tariff explainer

Demand tariffs are a new form of tariff intended to reward energy consumers who avoid contributing to peak network loads, and penalise that do. Here’s everything you need to know

Savings as a ServiceRichard Foxworthy

Unfortunately for the many Australian energy consumers now being pushed onto Demand tariffs by their distributors and retailers, despite being urged to use the official government services to find a better deal, the official government websites simply cannot perform a Demand-based comparison:

Bill Hero can:

This is just one example of how, at Bill Hero, we're committed to driving competition in the retail energy market through innovative, transparent, market-wide price comparison and an unprecedented, fully automated, high-quality experience that adds the missing service component to the comparison and switching landscape.

We're Bill Hero, and we're at your service.