iSelect fined $8.5M: Electricity Comparison Failures
The Federal Court has ordered iSelect to pay $8.5 million for providing false information relating to electricity comparisons.
iSelect admitted that it misled consumers when it claimed that:
1. It compared all electricity plans offered by its partners and
2. It recommend the most suitable or competitive plan,
Neither of these claims were true.
It also admitted that it misrepresented prices to almost 5,000 consumers and underestimated costs by up to $140 per quarter.
ISelect energy is used widely
iSelect is the market leader, providing around 2 million energy comparisons per year compared with the 3 millions switches that occur.
What drives iSelect to mislead on energy?
ISelect have 9 partner brands out of the 52 suppliers in the national energy market, and it is clear from the Federal court findings that they often don’t have the cheapest plan from their partner brands. For an actual electricity comparison we tested, they displayed 16 plans out of 230 plans or 7% of the available plans.
If you switch, they make money when they sell you to the energy company. We understand they get paid around $230-250 for a 2 fuel household. Their clients are the energy companies, who need to get a reasonable share of the switches, otherwise they will cease their arrangement with iSelect.
It’s time to ban energy brokers from taking commissions
The Royal Commission into banking proposed the removal of sales commission payable to mortgage brokers. The same logic applies here. A broker can’t serve 2 masters. Being paid by the Energy Company and needing to keep them satisfied with the flow of switches, means it’s not in their business interests to provide independent advice to customers.
Banning commissions would reduce costs and prices
A recent study showed that customers who switched in the last 12 months only save $45/yr compared with those who haven’t switched. Those same customers could save an extra $236/yr if they used Energy Umpire.
The cost of commissions requires Energy Companies to charge $35-40/yr more for electricity, just to cover the cost of paying companies like iSelect.
Using ISelect energy there are minimal gains for customers and extra costs for energy providers.
Get the Cheapest price
Energy Umpire compares properly, comparing every Supplier and calculating savings. Critically, Energy Umpire does not take commissions or inducements of any kind from energy companies. It’s free to find out how much you could save and our charges start at $10 for a single switch to the cheapest price. It’s easy and quick to check your savings and switch.