Serge Almeerkat and rival Gio Compario have put comparison websites at the heart of many people’s buying decisions, but soaring energy prices and new rules for insurance sales mean tough times for the companies they advertise.
At a time when consumers are more anxious than ever to lower bills, websites have found themselves without any deals to offer on energy because extremely high wholesale prices mean suppliers aren’t offering cheap tariffs.
The sites get a commission from the companies when customers switch to them, and it’s believed to be around £30 for some energy contracts and £40-50 for insurance policies.
On Thursday, one of the largest financial markets, MoneySupermarket, reported a 25% drop in profits last year and said revenue from home services, which includes power switches, fell 34%. The company said it was expecting zero revenue from its energy business in 2022.
One of its competitors, GoCompare, said 2021 was a “year like no other” in the energy market. I discontinued this bar from comparison service altogether in September.
“Currently, there are no competitive deals available for people to compare to, but we hope to be able to offer this service again in the near future and back to help our customers save money on their energy bills,” a company spokesperson said. .
In October, USwitch made the unusual decision to announce to customers that they should “stay” with their current providers and stop using its energy service until further notice. “It’s something we never thought we’d say,” said a statement from the company at the time.
Comparison sites also face the challenge of new rules that ban loyalty fines on home and auto insurance.
The regulations, set by the Financial Conduct Authority, took effect on January 1, and state that anyone renewing their policy with an existing provider must not pay more than they would pay as a new customer. Customers who convert regularly have higher prices, while those who stay with their providers are now paying less.
At the time the rules were first announced, shares in Moneysupermarket and GoCompare’s parent company plummeted, and experts suggested that The incentive to shop for insurance would reduce Once you brush changes.
And higher interest rates mean some of the best deals on loans and mortgages are gone.
Danny Hewson, a financial analyst at AJ Bell, said companies need to evolve to weather the crude correction.
“They have been a huge success because they have become an essential tool but can this tool do more to help us buy time in our increasingly busy and costly lives?” She asked.
One way to do this is to focus work on areas where consumers are still eager to shop and where they are still going to save money.
“Many people are desperate to escape, but our collective confidence has been dented by the change in restrictions during Covid and many people will be looking for protection before they start looking for their holidays,” Hewson said.
Travel is expected to be a major source of income for price comparison sites this year, along with the broadband business becoming increasingly important as our homes become increasingly connected.
“While these actions are unlikely to cover all the losses on the energy side, they should help cushion the blow.”
MoneySupermarket has already put in place plans to offset its losses – including sending out claim letters to customers when savings can be made on products.
“While it is true that wholesale energy prices mean there are no competitive energy deals for consumers to switch to at this time, there are many other ways we are helping consumers save on their home bills,” a company spokesperson said.
“In recent months, we are seeing more of a shift to borrowing and banking products, as well as travel insurance. So the ways consumers can save with us are increasing, and we are investing in our website and systems to make it easier to do so.”
She will add a car insurance comparison MoneySavingExpertthat you own.
It also recently bought cashback site Quidco, which offers a bunch of ways to save money on products across the site. It was added to the company in November.
USwitch, too, said there are still products people can save on.
“It is likely that broadband and mobile customers whose contracts have expired will be able to find a better deal elsewhere,” a spokesperson said. “It is estimated that a quarter of people let broadband lapse, which means millions of consumers are missing out on their best deals and overpaying.”
However, he advised customers to “start the process by bargaining directly” with existing providers in order to negotiate a better deal before turning to them to switch.
Ultimately, though, the energy price challenge facing most comparison sites will end, and when that happens, experts said the switch market will recover.
The lack of cheap energy tariffs was “a temporary rather than a structural phenomenon,” said Giles Thorne, a financial analyst at Jefferies Group. However, he admitted that “the timing of the return in revenue is uncertain.”
AJ Bell’s Danny Hewson added: “The energy business has to come back. Consumers and businesses alike will not adapt if tariffs remain high in the long term.”
She said consumers are accustomed to relying on comparison sites when searching for deals.
“A lot of people feel that these sites are essential intermediaries, even if they are making money supplying companies with our business,” she said.
“We want control and we want choice, and just being able to compare one product to another can help us understand what we really need and what we’re willing to pay for.”
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