The real deal on price comparison sites

CONSUMERSseekingbargainsadded a new weapon to theirarsenal last week with thelaunchof thepricecomparisonsite Pricespy.ie. The website,which compares the onlinepricesofconsumergoods, joinsa range of price comparisonsites promising to get you thebest deal on everything fromelectricity to car insurance.With providers’ offers get-

ting ever more complex, pricecomparison sites have becomean important tool to help con-sumers evaluate the market.For example, in the energymarket there are now 50 gas,electricityanddualfueloptionsfromwhich to choose.When using price compar-

ison sites, consumer expertssay, it’s important to knowhow each one operates and tobe sure the information is reli-able. Fergal O’Leary, directorof research and policywith theNational Consumer Agency(NCA), said: “Price compar-ison sites are a useful tool but,like anything else, you need tomake sure you’re not simplymaking a choice based on onepiece of information. You alsoneed to understand how thesitesmake theirmoney.”We look at Ireland’s price

comparison sites for financialproducts, energy, insuranceand broadband.

FINANCIALPRODUCTSThe NCA website consumer-help.ie compares 244 financialproductsacrossninecategoriesincluding current accounts,loans, savings products,mort-gages and credit cards.The site is interactive and

will give you results based onthe information you enter. Forexample, if you want to save€10,000 for 12 months or less,the site gives you 17 possibleaccountsfromsevenproviders.Youcan sort the results bypro-vider and interest rate and youcan also click through each toget more product detail. Simi-larly, for mortgage compari-sons, you can tailor resultsgiventhetermofthemortgage,whether you want a fixed orvariable rate, and how muchyouwant to borrow.Consumerhelp.ie is state-

backed,sothereisnocommer-cial element. Information onthe site is updated on a dailybasis. “Banks and financialinstitutionsare required togiveus the date for any changes inadvance so whenever con-sumers look at a page, theyknow that they are seeingup-to-date information,” saidO’Leary.Commercial price compar-

ison site bonkers.ie also has an

interactive personal financesection, which compares 405financial products. Bonkers.iehas agreements in place withseveral providers and earnscommissionswhen consumersgo on to apply for a product.Bonkers.ie said that the

commissions it earns fromfinancial institutions had nobearing on how results werelisted. David Kerr, the man-aging director of bonkers.ie,said:“Ifwedidn’thaveanaffil-iation with a provider, wewouldn’t show their logo andwe wouldn’t have a ‘proceed’button — but if the price wasthebest, itwould still come topof the results.”

ENERGYComplex tariff and billingoptions of energy providersmake it difficult for consumersto assess offers.Research published by the

Commission for Energy Regu-lation (CER) last month foundthat 21% of electricity con-sumers found comparisons ofoffers difficult. About 26% ofelectricity customers and 30%of gas customers had not evenattempted to compare deals.Thetwomainpricecompar-

ison sites for energy in Irelandare bonkers.ie and uswitch.ie.Both sites are accredited by theCER for the prices they show.This means they meet theCER’s standards for accuracy,transparency and reliability.The CER regularly audits

each site to ensure itmaintainsaccreditationstandardssuchaslistingallavailabletariffs,usingone year as the default timeperiod for price comparisons

and indicating what termina-tion charges, if any, apply.Both sites are free and earn

theirmoneyfromcommissionspaidbysuppliersforprocessingcustomer switches. Bonkers.ieearns commissions from allsuppliers in the market, whileuswitch.ie has agreementswith all except Bord Gais andAirtricity, so you can’t cur-rentlyswitchtotheseprovidersonthesite.EoinClarke,headofuswitch.ie, said: “Whether ornotwehaveacommercial rela-tionship in place with a pro-vider makes no difference tothe results. We show thecheapest provider regardless.”One difference in how each

siteoperatesforenergypricesishow they calculate your one-year savings when switching.Bonkers.ie asks users whenthey joined their current sup-plier and includes when anydiscount expireswhenmakingits calculations. Uswitch.iecalculates savings based on astraight comparison betweenproviders’ one-year deals.The CER said bonkers.ie’s

methodwas an additional fea-ture and not a requirement foraccreditation, given that cus-tomers may find it difficult to

remember the timewhen theysigned up to a specific energyplan.

INSURANCEInsurance price comparisonsites tend tobe theonlinepres-enceof thebroker andmaynotlook across all available insur-ance companies when gener-ating quotes.“Online brokers may have

relationships with 10 or 12

providers so it’s definitely agood idea to go to a couple ofsites,” said O’Leary. He addedthat it canalsobeagood idea togo to the individual insurancecompany as well to see if youcan cut a better deal.O’Leary said it was impor-

tant when comparing insur-ance online to understand therelationshipbetween thequoteprice and the level of insurancebeingoffered.“Alowpricemay

indicate a high excess on thepolicy or a reduced level ofcover which may not be rightfor the consumer,” he said.Comparing health insur-

ance plans is notoriouslycomplicated, with more than200 different products onthe market. To help with thetask the Health InsuranceAuthority (HIA)has a compar-ison tool on its hia.ie website.Health insurance experts

say the site is helpful as it isalways up to date and containsa fully comprehensive list ofplans. The site doesn’t offeradvice,however, andthesheervolume of information canbewilder consumers trying tofigure out which is the rightplan for them.Dermot Goode of healthin-

surancesavings.ie, an adviser,said: “Depending on the planyouwant tocompareyoucouldbegivenamultitudeofalterna-tives to consider.”Goode said that the HIA’s

website doesn’t give advice, soit’s important to seek this out.“Health insurance is arguablymore complicated than pen-sions and fewofuswouldbuyapension without getting somelevel of expert advice,”he said.

TV/PHONE/BROADBANDConstantly changing tariffsand plans make comparingmobile phone providers analmostimpossibletaskforcon-sumers to do on their own.Jacqueline Moore, a regula-

tory analystwith communica-tions watchdog Comreg, said:“It’s become a lot more com-plex for consumers but there’svalue to be had once you findthe plan that is best for you.”In 2005 Comreg launched

callcosts.ie to help consumersnavigate the mobile phonemaze, before adding homephone and broadband com-parisons in 2006.Callcosts.ie compares more

than 350 plans. However, thesite lacks many of the featuresofamodernwebsitesuchastheability tocompareplanssidebyside. Comreg said it is workingon improving the look and feelof the site for consumers.Also missing from call-

costs.ie is the ability to com-pare triple-play home phone,TV and broadband deals. “Thedata is probably fine, but theconsumer experience islacking,” said Kerr.Uswitch.ie and bonkers.ie

also compare a wide range ofbroadband and TV deals. Aswith their energy compari-sons, the sites earn commis-sions from providers forfinding new customers.Always examine deals

before signingup toensureyoupay less. For example,uswitch.ie ranks UPC as thecheapest one-year broadbandprovider in Dublin 4 because itincludes an initial six-monthdiscount. However, to get thedeal you have to sign up for an18-month contract — makingitmoreexpensivethanImagineover this period.

Shoppingaround to cutbills has neverbeen easier—but checkyour sources,warnsMarkChanning

JUSTINFARRELLY

COMMENTRecently I helped anew client — a UScitizen, aged 28 anda full-time worker inIreland — set up apersonal pension. She

wanted to ensure her retirementfunding was addressed properly.She was surprised that Irishpeople in their twenties didn’ttreat it as seriously as she andher fellow Americans do. Thereit seemed the most sensiblething to do, even when you havejust started work.It struck me that we in Ireland

have been so overcome by theeffects of the Celtic tiger, thatwe have almost forgotten thebasics. When the tiger wasrampant, a “good-time Charlie”syndrome existed — enjoytoday, tomorrow will take careof itself. Retirement fundingdidn’t get a second thoughtunless you were aged 50 or over.This international perspective

was further reinforced whenreading an article on Australianpension funding. It highlighted

that, by 2030, only threeworking Australians will payincome tax for every retiredperson on the state pension.Some 20 years ago, that ratiowas six to one.It said most retiring couples

outlive their investments mainlydue to overspending on holidaysand other luxury items. TheAustralian equivalent of statepension age will be raised to70 by 2035.

Australia has the world’sfourth-largest retirementsavings industry and is held upas a model for other developedcountries.Indeed, Australia is merely a

few years further down thecurve from Ireland in itsdemographics and the level ofnon-state pension funding is farhigher there than in Ireland,with an enforced contributionlevel of 9.25% a year, up from

3% in 1992. If the problems ofAustralia seem bad, then thetime bomb that is the Irishpensions problem is horrendousand will only get far worse asIrish people age.Last year the UK introduced

automatic enrolment intopension funding for allemployees, partially driven bysome amazing longevitystatistics. One estimates thatthe first person to receive aUK state pension at age 120 isalready in receipt of the statepension. This means that suchan individual will spend moretime in retirement than they didworking. Scary.As a financial planner I know

that most Irish people balk atpaying more than 5% of theirannual salary into theirpension plans. Unfortunately,the problem can only be solvedby larger contribution levels,time and good investmentreturns. It behoves all of us tofeather our own nest, soonerrather than later, otherwise the

consequences will be dire forour own old age.

Nothing personalEvery so often I meet a personalinvestor who says this is theright or wrong time to invest,depending on whether themarkets are going up or down.Many people lacking experiencein dealing with investmentmarkets — and even some whoare experienced — tend to lookupon public facts about themarkets as reassurance aboutwhat they are thinking or, morecorrectly, hoping.In behavioural finance this is

referred to as confirmation bias,whereby people favourinformation that confirms theirbeliefs or hypotheses even ifsuch confirmations turn outlater to be false indicators.It is similar to a herd

mentality, in which people canbe overly influenced by peers inadopting certain behaviours andfollowing trends. Investmenthistory is riddled with herd

mentality events, from thetulip mania of 1637 through torecent times, when globalproperty bubbles made manyseem smart before lookingextremely foolish.So if you can’t outguess the

markets, what should you do?The starting point for all

investing lies not in whatmarkets are doing but ratherwhat your personal needs are.By defining individualobjectives, we can then setabout expressing these infinancial terms. Of course, suchplanning is not a simple processand requires a lot of thought.Yet, in my experience, once

this whole area is addressedproperly, investment decisionsand their long-term effectsbecome more realistic, as doesthe evaluation of competinginvestment options.After that it comes down to

long-term planning, and notshort-term reactions toinvestment flavours of themonth or fancy new investment

funds. This allows investorsto exert control over theirfinancial outlooks rather thanbeing held hostage to them. Inother words, by controllingwhat we can control, namelyour behaviour, we can have adisproportionate positive effecton our financial wellbeing.As far back as 2000, Meir

Statman, a distinguishedbehavioural economicsprofessor, produced researchwhich showed that 93% ofinvestor returns wereinfluenced by their personaldecisions and not those ofindividual fund managers or,indeed, the performance ofinvestment markets.The bottom line? Before you

make a decision to jump in andout of markets, think aboutwhat your investment objectivesare and whether they arealigned to your asset allocation.If there is a mismatch, then

the issue isn’t the vagaries ofthe markets, but your ownpersonal bias.

EAMON PORTER

Time-honoured solution to old pension problem: put in more

Cathy Tierney, 41, from Co Dublinsays that price comparison sites canbe a useful tool for anyone looking tosave money when shopping online orcomparing offers. Tierney usespricespy.ie, which has just launched inIreland, to help her find the best dealsfor her online purchases.Tierney recently bought a Nespresso

coffee machine from a provider shesourced on the site, saving €30 on thefinal price in the process. “I do a lot ofshopping online. At the moment I’mlooking into buying a new laptop.Without using a price comparison sitethere’s a lot of research, and you have

to bookmark various sites and jot downprices,” she said.Tierney said one of things she liked

about pricespy.ie was the fact that shewas able to filter results between Irishand international online retailers. “I preferto order from Irish stores so you don’tend up paying for international shippingor in a foreign currency. Things also getdelivered more quickly,” she said.The increased number of providers in

the energy and broadband market, andincreased complexity in plans, meantthat Tierney would use price comparisonsites to compare offers. “There is suchcomplexity in the market nowadays,

whether it is comparing retail products orservices like energy or broadband, thatyou need a price comparison site to sortthrough all the various options.”Tierney reckons comparing offers,

whether for insurance or consumergoods, is vital if you want to get thebest deal. “Irish people love a bargainbut it’s really important to shoparound,” she said.Tierney said that being able to shop

and switch online made the process somuch easier. “It’s great to be able toswitch online — talking to companies onthe phone can be a nightmare.”

MARKCHANNING

’Pricespy savedme a latte cash on coffeemaker’

IT’S BECOMEMORE COMPLEXFOR CONSUMERSBUT THERE’SVALUE TO BE HAD

Tierney uses price comparison sites to weigh up her energy and broadband options. ‘It’s great to be able to switch online — talking to companies on the phone can be a nightmare,’ she says

Money 06 .07. 2014THE DUDE PROVIDESRacehorse Monbeg Dude has been agreat earner for Mike Tindall p13

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