One Big Switch, the home loans, energy and insurance comparison service with links to News Corp and Channel Seven, has been fined $25,200 for allegedly misleading consumers.
The ACCC alleged that One Big Switch gave “false or misleading” price comparisons between Click Energy, EnergyAustralia, Origin and AGL.
The allegations have to do with the difference between “standing offers” and discounted offers, and go to the heart of why it is so difficult for consumers to compare electricity providers.
Every energy retailer must by law have a “standing offer” alongside its discount offers. The standing offer is the default price for customers who do not pick a discounted plan.
Retailers can price the standing offer as high as they like, and generally they are the most expensive offers on the market – an issue which was the focus of a major ACCC report on energy prices earlier this month.
The ACCC claimed One Big Switch misled consumers by comparing Click Energy’s discounted offer with the other three retailers’ standing offer.
This, it said, was misleading because the other three retailers had cheaper discounted offers, meaning the size of the discount was inflated.
ACCC claims savings were much less than advertised
“The actual savings for some consumers were much less than the amount advertised by One Big Switch,” ACCC chair Rod Sims said.
“We allege that as a result of these claims, consumers were misled into assuming they were getting bigger discounts and savings than they would actually receive.”
“Electricity costs are one of the most significant expenses households have to face. Businesses are reminded that any misrepresentations made to consumers about electricity prices will be met with ACCC action,” Mr Sims said.
In its recent energy industry report, the ACCC recommended that standing offers be replaced by a single, universal default price for power, that all discounts would be benchmarked against.
One Big Switch owner RevTech Media said it would support such a benchmark.
“RevTech Media accepts the umpire’s decision and has, since November 2017, required all Energy offers sourced for members to be expressed as a headline discount off the retailer’s standing offer rates.
“RevTech Media looks forwards to regulators and governments developing a simple, common price benchmarking system that will allow consumers to easily compare the price of energy offers – which they cannot currently do.”
Like most comparison sites, RevTech Media is a for-profit enterprise that receives commissions whenever consumers sign up to a new energy provider.
The ACCC was highly critical of the role of commercial comparison websites in its recent report, claiming among other things the need for retailers to pay commissions was actually raising the cost of energy.