Don't discount the value of price comparison sites
PRICE COMPARISON websites which promise to save cash-strapped consumers money – sometimes an awful lot of money – are suddenly two-a-penny in Ireland, as businesses and individuals laid low by recession belatedly latch on to the notion that there is cash to be made by saving us cash.
Key in “price comparison website” into any search engine and you will be presented with scores of sites promising to save you money on everything from your insurance to your phone to your groceries. While many of the sites are automated and just trawl other websites to collate pricing information in real time for consumers too busy to do the leg work themselves, there are also a growing number of personalised services which use real interaction to find people better value for money.
Mortgage broker John Coleman from Castleknock in Dublin is behind homesavers.ie, one such company. Like many in his profession, he saw much of his business evaporate when the property bubble burst. With many of his income streams drying up almost overnight, the first thing he had to do was work out where he could economise. “I had to look at my own costs, and as I was doing it I thought it would be great if I could make just one call to get all the information I needed to save as much money as I could,” he says.
In the absence of such a service, he decided to set something up himself, and home savers.iewas born. “Put your money back in your pocket” runs the tag line on the site, which promises to save homeowners a few hundred to more than a thousand quid with one phone call. The way it works is very simple.
After you make contact with the company via the site, they call you and ask for a detailed list of your outgoings in the areas covered by the service. Within days you will be issued with a report on where better value can be found across the board. You then make the calls to the providers and make the changes yourself. There is no cost for the service.
“Companies trade on people not having the time to shop around, but we have the time to shop around for them,” Coleman says. The company breaks the spending into two distinct categories – basic insurance products which cover life, home, car and health, and utilities, which take in electricity, gas, broadband, landlines and mobile phones. Homesaver.ieis regulated by the Central Bank when dealing with insurance products, but when it comes to utilities there is no regulation.
As a result of the regulation process, there is only one health insurer Homesavers is allowed to deal with and to recommend – Aviva. “We are not authorised to advise people to look at the VHI or Quinn Healthcare,” Coleman concedes. It is a small chink in his armour.
“I think we could save homeowners anywhere between €300 and €1,000 a year, and that is by not changing the level of cover or type of services they have at all, but just changing the provider – but the actual number depends on how efficient a family is in the first place,” says Coleman.
Saving someone €1,000, particularly in these economically challenging times, is a big claim, but do the numbers stack up? Coleman is certainly convincing, and much of what he says tallies with Pricewatch’s experience.
The first area where money can be saved, he says, is utility bills. A couple of years back, hundreds of thousands of us cleverly made the Big Switch and moved from the ESB to Bord Gáis Energy, which was promising to undercut the one-time monopoly by as much as 20 per cent. (Incidentally, those of you who never made the switch, hang your heads in shame!)
“People made the change and then thought the job was done and they would be able to avail of the savings for ever,” he says. “But the utility companies are very clever, and after the year-one discounts are gone they quickly switch you back to the higher rate – so what people need to do is shop around all the time.”
It is much the same story when it comes to mortgage protection life insurance, which banks have as a precondition to any loan. “Very often people took out policies with the banks who supplied them with the mortgage just because it was the simple thing to do, and then in far too many cases they have just kept paying their monthly premiums without thinking about it – despite the fact that there is much better value out there,” he continues.
“Between electricity and gas, I think we can save consumers around €250, while the same savings are available with mortgage insurance,” Coleman claims.
He appeared on Dragon’s Den earlier this month looking for €40,000 for 25 per cent of his company. There were no takers. “It was bizarre. It wasn’t the money I was looking for so much as the expertise and the contacts. I wouldn’t normally dwell on a meeting once it is finished, but on this occasion I was so far out of my comfort zone that I spent weeks afterwards thinking about it and what I could and should have said differently.”
Another comparison and money-saving site which has been making waves is bonkers.ie. Last month, it was accredited by the Commission for Energy Regulation as a price comparison website for gas and electricity – the first and so far only such site to win official recognition. The site was set up in 2010 by David Kerr as a personal finance comparison service with a focus on fuel. To date, about 150,000 consumers have used its services to make savings on either gas or electricity and by checking their current supplier and tariff against everything else on the market.
“We make it easier to find products that are suitable for you and we take all the pain out of the research,” Kerr says. “And once you have found a product you are interested in, we help you with the switch and help to take the leg work out of it.”
While the company largely carries links to various sites, it can also engineer the switches for some products – although when it comes to financial products such as credit cards it can be more complicated because of money laundering legislation.
Kerr says a person who has never switched from their existing provider to a competitor could save in excess of €1,000 once all switches were affected, and points out that for consumers the service is always free. “We don’t colour or adjust the data, it speaks for itself. Of course, it costs money to put this service in place and we make our money partially through commissions and partially through advertising. If someone signs up with a service via our website, we get a percentage. We are a mediation company and we are only asking for a commission on success.”