FCA Aggregator Review – price comparison sites criticised

Date: 04/08/2014

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The Financial Conduct Authority (FCA) has found that a number of insurance price comparison websites are not providing sufficient information for customers to make appropriate choices.

According to an FCA review, some websites which offer comparisons of general insurance policies focus too heavily on the price and branding of the policies, failing to highlight important features such as the coverage and terms of the policy.

The regulator expressed concerns that this could lead to customers making purchases without properly understanding important features of policies or being able to suitably compare them to other available insurance products.

It was also discovered that some customers did not understand how the sites worked, and many believed that the recommendations were individually tailored to their situations and needs, rather than serving as generic overviews of different policies. The FCA believes that this is because the sites did not make the nature of their offerings clear enough.

In addition, some sites were found to be in breach of FCA regulations because they did not divulge the potential for conflict of interest in cases where they had commercial relationships with insurers or insurance brokers.

The FCA’s director of supervision, Clive Adamson, 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.”

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