The Financial Conduct Authority (FCA) has announced that it is to investigate price comparison websites (PCWs) to see if they are misleading customers.
FCA probes price comparison market
General insurance products, namely car, home and travel insurance, are being included in the FCA’s review as these are the most popular insurance products searched for on price comparison websites.
There are a number of specific points which will be looked at to see if customers can make informed and balanced decisions when purchasing insurance on PCWs:
- Information about exclusions isn’t always clear and the focus on headline price may mean that people buy policies or add-ons which don’t meet their needs.
- Consumers may be treated unfairly if firms are overly focused on making money and there are potential conflicts of interest which insurers owning PCWs.
- Companies may not be meeting all their regulatory requirements such as clearly explaining their role and complaints regime.
FCA has already shown interest in PCWs
The FCA, which replaced the Financial Services Authority in 2012, can get companies to change adverts or promotions, or issue fines in more serious cases.
It has said that the aim of its review is to ensure that people can use price comparison websites with confidence, and make informed decisions because the product information is clear.
A risk review in early 2013 indicated that PCWs using automated comparison algorithms to quote for millions of people at low cost might not be able to properly scrutinise their own practices.
In May 2013, Which? surveyed 6,038 members and found only a third (32%) trust price comparison sites to find the best price.
We also found that like-for-like quotes on 10 comparison sites for one high-risk scenario involving a young driver in a high-risk postcode produced prices that differed by more than £1,500 when looking at the cheapest quotes on each website.
Which? wants more transparency
In response to the Financial Conduct Authority announcement, Which? executive director, Richard Lloyd, said: ‘We welcome the Financial Conduct Authority’s review into price comparison sites. We found they claim to do all of the work for you but they don’t always guarantee people the best deal or even the right one.
‘We want comparison sites to treat customers fairly by being upfront that they don’t cover the whole market and more transparent about what is and isn’t included in the policies they’re selling.’