Marzena Lipman Policy Manager 5 February 2014 Consumers and comparison tools DG Sanco Multi-Stakeholder Group on Price Comparison Tools Marzena Lipman Policy Manager 5 February 2014

About Consumer Futures Consumer Futures represents the interests of consumers across essential, regulated markets. We use compelling evidence, expert analysis and strong argument to put consumer interests at the heart of policy-making and market behaviour. Consumer Futures is the statutory representative for consumers of postal services across the UK, for energy consumers across GB, and for water consumers in Scotland.

About Consumer Futures We have carried out extensive research into price comparison tools

Price Comparison Tools (PCTs): the growing market trend Proliferation of PCTs in the market which vary in terms of market segments and business models: Generic versus sector specific (eg energy, finance, telecom) Information only versus switching/purchasing sites Different information sourcing (eg some have direct arrangements with suppliers, others scrape information from suppliers’ websites) Different financing models (eg revenues from advertising, commission earned on completed switch/purchase or redirecting to suppliers’ sites, or ‘other’)

Price Comparison Tools (PCTs): the growing market trend (2) Market innovation and the development of the ‘new breed’ of PCTs Collective switching sites like the Big Switch Group purchasing sites like Quidco, Groupon, Amazon Local Data analyser services eg Billmonitor.com Price comparison apps

Price Comparison Tools (PCTs): the growing market trend (3) ‎ Compare car insurance, travel insurance, credit cards, savings accounts, current accounts and mortgages with Google. Start a new quote, retrieve previous ...

Growing consumer awareness and take up 85% of consumers are aware of price comparison websites (PCWs) 83% aware of the ‘Big Four’ (MoneySupermarket, Comparethemarket, Confused and GoCompare) versus 6% aware of other than the ‘Big Four’

Growing consumer awareness and take up (2) The ‘Big Four’:

Growing consumer awareness and take up (3) 56% of consumers have used a PCW in the last two years, of which 85% used one of the ‘Big Four’ and 8% not one of the ‘Big Four’ 52% of consumers who have used a PCW in the past two years have switched or purchased directly through a PCW

Products/services searched for via PCWs

Products/services switched using PCWs 52% of consumers in our quantitative survey said they had switched providers or purchased directly using a PCW

Growing consumer interest in alternative comparison models and services In 2012 the Big Switch collective switching offer in the GB energy market initiated by Which? and the campaigning platform 38 degrees resulted in: c 287k consumers registered their interest in the initiative - of which c 151k went to provide the requisite information about their current energy tariff arrangements and consumption history - of which c 37k have switched to the winning provider and achieved an average saving of £223

Why people use PCWs

Usability expectations Most important features when using PCWs

Potential to empower consumers Save consumers time and money navigating through a proliferation of deals on the market, and the complexity of products and services Take the hassle of switching Help consumers to understand their consumption needs, and potentially lead to changes in consumption behaviour

Consumer concerns Issues of impartiality, reliability and accuracy of information Effective remedies and redress Enforcement of consumer protection regulations Data protection Accessibility and usability

Market challenges Availability of information Switching barriers e.g. some suppliers - do not want to be listed on PCWs - decide to supply data to selected PCWs partners only -put pressure on PCWs to exclude the offers of key competitors Switching barriers e.g. switching levels high in the insurance sector, but low in the telecom market) Regulatory barriers e.g. lack of a unified approach to the PCWs market by regulators, problems with regulation versus innovation

How are PCTs working? PCTs do well on some things… And not so well on others…

How are PCTs working across sectors: Accuracy How costs on supplier site compared to costs on price comparison site: Was the supplier cost …?

How are PCTs working across sectors: Information Transparency Did price comparison website supplier provide information on?

The level of consumer satisfaction

Ease of use

Useful in finding a good deal

Useful for switching suppliers

Whether PCWs are perceived to give a good deal? Trust Whether PCWs are perceived to give a good deal?

Consumer behaviour The need to verify PCWs results Number of PCWs used before making a decision

Consumer behaviour The need to verify PCWs results Reasons for looking at multiple PCWs

Understanding and trust in rankings Consumers rely on assumptions about both the price they pay and the pricing details provided by PCWs Many consumers lack clarity about the way results are ranked Many consumers are not clear about how suppliers included in the ranking are selected Some consumers are confused by positioning of adverts and sponsored links next to research results

Clarity about ranking criteria

Clarity about how suppliers are selected

Knowledge and understanding of PCWs business models

Clarity on whether suppliers can influence ranking by paying

Privacy concerns 30% do not switch through PCTs due to concerns about their personal data Will I get lots of unwanted calls and emails from them or other companies? Are they secure? What do they do with my information? Will they sell my data to other companies? Why do they need to know detail information about me?

Regulators’ initiatives

Awareness of voluntary accreditation schemes

Whether accreditation schemes would influence choice of PCW in future

Who would be the most trusted to run an accreditation scheme?

Way forward Address issues of accuracy and reliability of information of PCWs Raising awareness of accreditation schemes More effective advertising of collective switching sites and next generation PCWs Address privacy concerns Improve usability and accessibility Improve access to data Reduce switching barriers More joint up approach of regulators

Thank you