Financial News

  • 17 July 2014, 7:58

Watchdog Warning On Price Comparison Sites

Some price comparison websites are failing to meet regulatory standards, according to the Financial Conduct Authority (FCA).

The City regulator found operators in the general insurance sector, which includes property and vehicle cover, were not meeting consumers' expectations and did not always ensure that people were given appropriate information to help them make informed decisions.

The FCA said it was particularly concerned that consumers' focus on headline price and brand when using such sites could distract from crucial product features, such as policy coverage and terms.

As a result, the websites were increasing the risk that consumers bought products without understanding key features such as level of cover or excess levels.

Clive Adamson, FCA director of supervision, said: "Price comparison websites have increased in popularity among consumers, with an estimated one third of consumers buying their motor insurance policy through them.

"They provide an important service for millions of consumers bringing convenience and simplicity to buying financial products online.

"However, our review found that they were not meeting our requirements in delivering fair and consistent outcomes for consumers. 

"We also found, through our consumer research, that consumers had a number of misconceptions about the services they provided.

"We expect price comparison websites to take on board the findings of the review.

"It is also important for consumers to understand that not all products are the same and the cheapest product may not always be the best for their needs".

The review's survey also found some people mistakenly believed that a price comparison website had provided them with quotes on the best policy for their individual needs and had assessed the suitability of the policy for them. 

The FCA said too that not all comparison sites, that were part of a larger group of an insurer or broker, disclosed this potential conflict of interest, which was against FCA rules.

The watchdog declined to name any firm found to be at any fault.

Hayley Parsons, the chief executive and founder of Gocompare.com, told Sky News it had contributed to the review and supported efforts to improve standards though it had "always strived" to operate in its customers' best interests.

She said: "Gocompare.com fully supports measures to promote best practice in the PCW industry.

"Although we regularly update our services to reflect our customers' evolving needs, we will be reviewing the findings of the FCA's report".

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