If you’ve had any dealings within the energy sector you will be well aware of the investigation surrounding it for the last two years.

A cause for examination into current practices was established because of the results of an earlier study, which suggested competition in the energy sector wasn’t working as well as it should for customers. The Competition Markets Authority (CMA) started its investigation in June 2014 and the final report was published in June of this year.  

The document, which you can read here, contains over 30 suggested remedies to certain issues at the energy sector’s door. The overall objective is to free up competition and get providers to innovate again, with this tipped to drive down bills and improve service for customers.

Its contents affect a range of industries, and throughout the two-year review period there have been a number of changes, uncertainties and restrictions on the affiliate sector.  

It brings a welcomed end to what has been a period of much scrutiny, and I believe the outcomes have been mostly positive for the affiliate sector. Publishers promote competition, educate and support consumers in switching, which is ultimately the objective of all parties, including the regulators. Here are my main takeaways from the report:

Discount and cashback no longer restricted

The restriction on discounts, reward points and cashback has been removed. For over a year there was a restriction placed on suppliers which led to a complete ban on cashback. Reports a few months ago indicated that the CMA was recommending Ofgem to remove this restriction and the report confirmed this.

Many stakeholders in the affiliate industry including cashback websites, suppliers, networks and the IAB lobbied hard to get this restriction removed, and it’s good to see success in that regard.  After all, flexibility to discount and use incentives is a positive consumer experience and can only help in getting more consumers to switch and ultimately save money.

Many of us felt this restriction went against everything that the report was meant to achieve, so it’s very positive that the ban has finally been lifted.  Most energy suppliers are now offering discounts, rewards and cashback again, but it’s still early days for this one.

Price comparison finds middleground

Another restriction was imposed on price comparison sites, which has made a significant impact over the last year.  

In January 2015 Ofgem directed price comparison websites to list the “whole of the market” when returning results of available providers, regardless of whether commercial relationships were in place. Whilst I can see there is some sensible reasoning behind this, particularly with regards to energy suppliers outside of the “big six” struggling to get any real reach on price comparison sites, it is also a major problem commercially.  

Price comparison websites have to be funded, otherwise they cease to exist, and that funding comes from advertising and converting consumers to switch.  If there is no need to even strike up a partnership, these sites cannot operate.  

The rule has now been lifted by Ofgem, but the group has communicated that it will not act immediately on the CMA’s recommendation to remove this restriction.

There is however a proposal to implement a second step, which would remove some of the restrictions allowing price comparison to choose how they display certain tariffs.  My advice would be to watch this space to see if the “whole of market” restriction remains or is removed, but I suspect the outcome will be something in between the two.

Use of data

A key finding in the report, and perhaps an area that offers the most opportunity to the affiliate sector on the whole, the CMA found that two in three households are disengaged when it comes to energy and are paying more than consumers who have switched.  It is now a key objective of Ofgem to engage and empower those consumers to switch, and I see the intelligent use of data as the key to unlocking this opportunity.  

Using data to empower consumers with information on their energy consumption and costs will enable them to make better-informed decisions on whether they should look to switch, or perhaps find a different tariff with an existing supplier.  Even small details such as using online billing can help consumers save money and affiliates can play a key part in that education and search.

The government-led rollout of Smart Meters will support this approach and help consumers better understand the benefits of switching and ultimately help them do so. Those companies that can match this data with successful marketing will start to unlock those disengaged energy consumers.  

As aforementioned, the report delivers implications for a number of industries, but it’s fair to say the affiliate sector has, for the most part, benefitted from its release.

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