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Comparethemarket ready set go for Large IPO



The South African owners of Comparethemarket, Britain's largest price comparison website, are considering a public listing that could value its parent company at several billion pounds.



BGL Group, which also owns insurance brands such as Dial Direct ,a trading name of BISL Ltd, has begun exploring a flotation in London.

Sources said on Wednesday that no final decisions had been taken by BGL, and that bankers had yet to be formally hired to work on a listing.



If they do decide to press ahead, Comparethemarket would have a direct public company peer in the form of Moneysupermarket while Uswitch is owned by Zoopla, the listed property group.



The recent resignation of CFO who has served as Zoopla Property Group's finance chief, joined the business in 2013. He spent more than a decade at Betfair, including a stint as its interim CEO.

Morana is a non-executive at BooHoo.com, his departure has triggered speculation ,that zoopla may be vulnerable to takeover .

Zoopla Property Group (ZPG) is also trialing a pilot affiliate marketing scheme, for its members. The pilot scheme will help inform and create an opportunity for ZPG members, to earn additional revenues from home switching services


Privately held rivals include GoCompare and Confused.com.

The structure of an initial public offering of Comparethemarket was unclear on Wednesday, with a spokeswoman unavailable for comment.

The price comparison sector has seen explosive growth during the last decade, with a land-grab for market share fuelled by huge marketing budgets.
Comparethemarket's advertising campaigns featuring a family of talking meerkats have made it one of Britain's most recognised consumer brands.

The industry has, however, begun to face growing pressure from regulators amid criticism over a failure to disclose commissions paid by services featured on their sites.






Power giants have won a secret battle to hide the scale of the profits they are making by refusing to cut prices.

Last April the energy watchdog was bullied into ditching data that show whether households are getting a good deal.

These vital figures used to be published monthly. They showed the difference between what power firms were paying to supply energy to your home and what they were charging you on your bill.

It was a rough guide to the size of the profits they were likely to make.



Grabby: Powerful energy firms bullied Ofgem into ditching data that  showed the difference between what power firms were paying to supply energy to your home and what they were charging you on your bill






Grabby: Powerful energy firms bullied Ofgem into ditching data that showed the difference between what power firms were paying to supply energy to your home and what they were charging you on your bill


In the last month before these figures were scrapped, the Big Six energy companies were shown to be charging 9 per cent more than it cost them to provide gas and electricity to households.



This translated into £120 profit per customer, according to regulator Ofgem.

But the information was quietly removed. Since then it has been impossible for households to know whether providers are making a fair return.



Providers say they are making less money this year because of the warm winter and have kept prices high to compensate. But experts suspect they are boosting profits while sitting on piles of your cash.This is because in the past nine months power firms have benefited hugely as the price of oil has crashed by 54 per cent to a 13-year low of $30 a barrel. In turn, this has slashed the cost of supplying energy to British homes.

But the greedy firms have failed to pass on these savings to customers. Just three of the major firms have cut gas prices since April — and by no more than 5.1 per cent. And electricity prices have not budged in two years.

In yet another sign that the Big Six are charging too much, smaller companies are using falling oil prices to launch ever-cheaper dual-fuel tariffs.

The result is a ballooning gap between the rip-off charges at giant providers and the cheapest deals on the market. We found families can save £405 by switching supplier — a record amount.



The energy giants have been left free to profiteer after a major crackdown on the industry was delayed for months.

Meanwhile, complaints about big firms’ shoddy customer service shot up by a quarter last year, according to the energy ombudsman.


Mark Todd, director of comparison website Energysavinghelpline, says: ‘If we don’t know how much profit firms are making on energy bills, how can we ever be sure we are not all being taken for a ride?

‘It looks very weak for the watchdog to have bowed to the pressure from the big suppliers in this way.

‘It appears to be admitting it can’t work out what profit levels the big firms make — but isn’t that its job and what we pay it millions for?’

Since April, wholesale gas costs have fallen 36 per cent and electricity costs by 24 per cent — a potential saving of £146.

Yet just as wholesale prices started to plummet, regulator Ofgem stopped publishing how much profit it expects energy firms to make.

Insiders say the Big Six had complained the way the figure was calculated wasn’t accurate.

They argued it was just an estimation and did not take into account all of their costs or the price they paid for energy.

Ofgem’s figures from April showed energy firms had the potential to make a margin of £120 per household.

The three price cuts since include SSE reducing gas prices 4.1 per cent in late April 2015, a saving of £28 a year per household.

In August , British Gas cut prices 5 per cent and last week Eon reduced their gas price by 5.1 per cent, saving households £30 a year. There have been no electricity price reductions in that time.

Suppliers claim they have been hit by other costs, such as the recent stock market turmoil and government social and environmental policies. They also claim that because they buy energy far in advance, the mild winter has hit their bottom lines.


Price comparison websites face another challenge with the launch of a service that claims to help customers switch suppliers based not just on cost but quality and transparency as well.

B Heard is backed by Sir John Hegarty, cofounder of ad agency BBH, and venture capitalist Tom Teichman, who helped fund the creator of Moshi Monsters, the online children’s game

B Heard says it is the world’s first “value comparison platform”. It will offer information not just on price but customer service, regulatory breaches and fines. It will cover the energy, insurance, phone and internet markets as well as public services such as healthcare, education and local government.

MPs attacked price comparison sites in February for “duping consumers” by failing to reveal they received commission from companies they recommended. Rankings on several sites were influenced by how much they were paid by the energy, telecoms and companies from other sectors they were recommending.

The Energy and Climate Change committee in collaboration with UK Gov watchdog CMA produced a damning report and said customers misled should receive compensation.

The big five comparison sites

uSwitch 
MoneySuperMarket.com 
Compare the Market 
Confused.com  
Go Compare 

told the committee they earn up to £60 in commission when a customer switches their electricity and gas suppliers.

B Heard will be free to use, with customers expected to provide opinions on companies, rather like TripAdvisor. But it will charge companies for sharing consumer sentiment with them, arguing it will help them improve their service and retain customers.
Its success will depend on building a big group of users quickly.

Its algorithm aggregates consumer ratings and reviews with regulatory fines and consumer complaints, using information from public bodies such as Ofgem.

Oscar Vickerman [pictured below], chief executive, said it would soon be launching marketing campaigns to recruit customers. But he said it would not offer a switching service or compete with suppliers.



“We are a partner. We are already talking to one of the big six energy firms. We can help them improve the customer experience. There will always be people who buy on price, but others will look at value. The cheapest is not always the best.”

That would include how long it takes to answer phone calls or fix a fault.

Mr Vickerman worked for British Energy, the nuclear power generator sold to EDF of France. He said “essential services” such as banks, energy and water suppliers often had low customer satisfaction.

That is changing because of new entrants and government regulations to make switching easier.

He said about £23bn annually of spending was influenced by customer reviews. Its software could detect false reviews by checking IP addresses

David Reynolds, a research analyst at Jefferies, said the customer service issues were “very real” and the market was ripe for change.

“If there is a greater drive to transparency and if sites are compelled to disclose to consumers that the ‘charge’ for switching a £500 car insurance policy is, say £50, then there may be real debate about whether that is the right price. And inevitably, competitive tensions will build further and that price will move, downwards.”

B Heard will also donate to charity on behalf of customers who provide opinions.
The company is based at The Garage Soho, a tech accelerator who has also given seed investment to online estate agent settled set up by Sir John and Mr Teichman.

Mr Teichman, who was in at the beginning of the UK tech revolution with lastminute.com [Pete flint CEO of US property search portal Trulia,and Dame Baroness Lane-Fox  also founders]

 “The comparison market is big but it’s pretty narrow, boring and ripe for disruption. B Heard is able to do this — uniquely delivering for people who realise there’s more to a good deal than just price.”


Comparison websites began in the late 1990s after the deregulation of the gas and electricity markets allowed consumers to choose a supplier. Uswitch launched in 2000 and quickly rose to become one of the most influential. More sites followed – including Moneysupermarket, Gocompare and Confused.


Their attraction was simplicity. Before these websites, if someone wanted to find the best car insurance or home cover they would have to either call each insurer to get a quote or go through an insurance broker. On a price comparison website, the same job takes just minutes.

Comparethemarket’s own estimates are that they save customers £1.2billion a year, and that customers who swap car and home insurance, credit card and energy providers through them can save £2,300. But, critics argue, they are riddled with problems.

James Daley, founder of consumer website Fairer Finance, says: ‘There is not nearly enough transparency. Comparison websites are too concerned with getting as many people through the door as quickly as possible so they can earn their commission.

Opulent: Compare the market founder Douw Steyn owns his palatial cliff-top mansion in South Africa Johannesburg, thought to be the most expensive house ever built in the country.

He has also built his own mega city ,to house his home, in Johannesburg called Steyn city. 




Comparethemarket launched in 2006 as an insurance comparison site, subsequently expanding to enable customers to compare energy prices, credit cards and loans.


In 2014, BGL reported revenue of £507m, with pre-tax profit of £94m, up from £88m in 2013.


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