The truth about comparison websites

Around 10 million people use price comparison websites each year in the UK. They're quick, convenient and save us a lot of time shopping around. But not many of us realise that we're paying around £650 million a year in commission for the privilege.

A recent YouGov survey found that consumers thought they paid between 5% and 10% in commission when they bought something through a comparison website - in reality, the average commission is 24%. But is there any way of avoiding these hidden charges? Moneywise investigates.

Comparison websites make their money in a number of ways. The simplest and most obvious is from advertising on the website. A second income stream comes from sponsored listings, whereby companies pay to have their products appear at the top of search results.

As long as price comparison websites make it clear that these listings are paid for and not necessarily 'best buys', this is perfectly legal. The third revenue stream comes from click-throughs where the comparison site earns referral commission when a customer clicks through to a company's website and buys a product.

The more people a comparison site can convert from lookers into buyers, the more income it will earn.

Comparison websites may mislead customers

Money spinners

The sites also make a lot of money in commission from the companies that list products on their websites. Commission works as a kickback for the comparison websites - the price they quote you on their website includes a payment that will go to them rather than the initial price provided by the company offering the financial product.

Make no mistake, this is big business.

The big four comparison sites -,, and - have been locked in a multimillion pound TV advertising battle in recent years. is worth nearly £560 million on the London Stock Exchange and is forecast to make around £40 million in pre-tax profits in 2011.

Cheaper to go direct?

So is there anything we can do to avoid paying high levels of commission to comparison sites? The obvious answer would be to buy direct from the product provider. But in the weird world of financial products you can actually end up paying more going down this route.

Take life insurance, for example. There are around 10 big life insurers in the UK. They quote monthly premiums for different types of risk, and build in a commission of around 30% to pay for distribution through independent financial advisers, brokers and price comparison sites. This is similar to the recommended retail price of electrical goods on the high street.

How the cost of Admiral car insurance goes up between comparison websites £638.57 £703.23 £654.31 £732.91 £668.25 Admiral £686.27

This is for a quote on a 2009 Citroen Xsara Picasso and a 40-year-old, male driver.

If you go direct to the insurer you will be charged this full price, whereas a broker or a price comparison site might decide to forego some of the commission in order to offer a better price than their competitors. The comparison sites will charge anything from 20% to 100% of the commission on offer from the insurance company, although exact figures are hard to find as the sites claim commercial confidentiality.

Ian Williams, managing director of execution-only broker Cavendish Online, explains: "There's a factory gate price for a product such as life insurance, then there's the price at which it's sold via intermediaries. Customers can end up paying hundreds of pounds in commission over a life policy's term."

The good guys

But it's not all bad for consumers. Cavendish and SaveItBuddy are lining themselves as the good guys in the comparison website world. Cavendish charges a fixed fee rather than taking commission, while SaveItBuddy returns part of the commission it receives to customers in the form of cashback. The cost of using the wrong comparison site or going direct to a company can really add up.

According to Cavendish, a 35-year-old man buying £100,000 of level term assurance with critical illness cover over 25 years direct from Legal & General could expect to pay a monthly premium of £36.51, or £10,953 over the life of the policy.

Buying the same policy from the same provider through Cavendish would cost £26.43 a month, or £7,929 in total – a saving of £3,024 (minus Cavendish's £35 arrangement fee).'s quote for the same level of cover was £32.48 per month, or £9,744 in total; £1,209 cheaper than L&G but still £1,815 more than Cavendish.

If this was made clear right from the start it's very unlikely anyone would buy life insurance direct from the provider. As it stands, commission levels are often buried deep in the smallprint.

Price comparison sites also like to give the impression that they scour the whole market to find you the cheapest 'best buy' products. But that often isn't the case.

Your Comments

It's about time insurance companies were brought to heel. They demand that the consumer tells them EVRYTHING that MIGHT have an impact on the cover required. But they use assumptions which are not explained and hidden statements in their small print which gives them wide latitude to renege on the cover provided.

In days gone by when you took out House/Contents insurance it was assumed you were covered for accidental damage. Now, when applying for cover you are asked if you want Contents Accidental Coverage! So what is one paying for by just taking out House Contents Cover? Baffles me!

if the law is going to say you have to have insurance then the government should set out what you pay. i.e. £X per square foot ground floor, slightly less next floor, less each floor on, plus so much for garden space.

Why don't you just ring your broker. He sorts my cars and home insurance every year for 20 years now and never any hassle. These comparison websites are a joke and the same goes for supermarkets selling car insurance etc. You are buying without advice so i say stick to what you know and try and stop being a know all.

No comment about your own compare and buy provider eh? A tad unbiased I think. You probably won't publish this comment but ho hum.

I have had my classic car insured for a few years with RH with no problems.
However, at renewal I thought it a good idea to just go and compare for curiosity. What a shock I got.
Entering all details honestly, and without then having to add the doubtless 'extras' which these sites seem to omit to give you a tasty premium - make sure you sort these out before presing the "pay" button - this was the result:-
Present premium £192.
Quoted £380 to £900.
Yes, I was being quoted for the same classic car.
With some restrictions on type of use I could get a premium of £112
Try your friendly local broker also - you may get a pleasant surprise because these comparison sites must live on the commission just as the broker does.

These websites ought to be regulated like financial advisers.
In particular whether they are independant or just Brokers.
From what I can see their all really Insurance brokers but hide behind the comparison website title to avoid behing sued.
I think if they were ever legally challenged in the high court the judges would find them as culpable in the "advice" they give as a high street broker and that they have the same duty of care in getting the right information from the potential client.

@M. Harrington:
>> Now, when applying for cover you are asked if you want Contents Accidental Coverage! So what is one paying for by just taking out House Contents Cover? Baffles me!

Shouldn't baffle you: all home insurance covers fire and theft, far more serious than accidental damage. They are giving you a choice - if you can understand it...

Everyone should learn the basics of insurance products, preferably at school. I think the problem is more about financial education than an issue with the comparison websites. As a 30 year old man, I have had to learn the hard way, also with help from MSE.

The comparison websites are invaluable tools when used correctly. I'm not saying that they're perfect but they can save a significant amount of money, especially if you just accept your providers renewal price (perish the thought).

U-switch messed up my switch.

I asked for an electricty switch from Scottish Power (I was on dual fuel).  They switched both.  When I complained they apologised and did nothing about it. (sorted now).

Incidentally I had terrible trouble registering with BG on line as they still held my e-mail registered from when I was with them ages ago.

R C M Matta




Most contents policies include cover for fire,theft, water damage and probably accidental damage to glass and TVs, and computers etc. The optional extra would be to also cover risks like breakage of ornaments or paint spilt on carpets.
This is one of the main options but you should also consider Legal protection and loss of items outside the home. I have been involved in Insurance for 30 years and people, especially older folk, do not always understand what they are paying for. I work for a local Age uk office,one of hundeds up and down the country and we offer a face to face service to all aged 50+ across the desk or to people phoning in. We are happy to take the time to ensure clients fully understand their cover particularly in regard to home, car and travel policies.

Interstingly having used a combination of comparison websites and local sourcing of information. I have found that those not on the websites have prices that are so far removed from those that are compatitive that they wouldn't have got the business anyway. They cynically remove themselves form websites with fanfare then spend what appears to be a fortune advertising how competive they are, relying on customer apathy to get the result.

More will remove themselves from these sites because they do not want to be compared and for the time constrained individual its to expensive to phone everyone to get a comparison and they know it!!

I have found that I cannot decipher whether a tree within five metres of your house means you are properly insured for any problem or not.
Even visiting insurance brokers does not result in answers.

It 'p's' me off because these forms are made to confuse No doubt thought up by lawyers on £200 per hr fees. I have been with Direct Line for years, and have found nobody better, and I have 2 kids insured as well. I can;'t be bothered with these websites, REMEMBER they are after your MONEY try Direct Line first. I am verry happy with them personally.

Try Direct Line - I have been with them for years, they are not on any comprison website (I dont get any money from them, saying this) but they are very competitive, and although I was p'd off when the insurance on my daughter's driving which went up £100 it was still better than anywhere else.The other bug.... have such confusing forms (thought out by their lawyers on probably £200 + an hour) you can easily come unstuck by unchecking the wrong box. I am very suspicious of these websites - after all, somebody has got to pay for the ads e.g. 'GO COMP...' and the guy with the ridiculous moustache (he has since bought a property from this lucrative deal) and good luck to him! YOU are paying for all this - Remember that!

I Have done so, and you wont show it!!

Importantly you haven't mentioned that the comparison websites earn huge commissions from introducing customers who then buy a policy. Car insurance for example pays around £50 per policy. Get your quote, then go to the insurer direct and negotiate a discount!

Websites that offer price comparison availability are liked these days by most of the people. The reasons are very much outlined by you in this article. Yes, there are things that are associated with it that you pointed out. But still there are all the benefits that one can not deny!! It's tempting and will remain that way..
Thank you.
Chris Harris

" For example, two of the UK's largest insurers, Aviva and Direct Line, are not listed on comparison sites, so it's important to also check individual providers' websites before you make a decision."

Yes because when you do compare their prices on a like for like basic they basically get blown way out of the water!!

Exactly what I did for 25years, My Broker always assured me it was the same cover on renewal or better!!!.
Every three years he advised we switch and a different company was used, my first policy was full accidental all risks, everything covered. By the time some 25 years later when I made my first claim for freezer contents he had diluted the policy down so I had no freezer cover, when asked about accidental damage he shied away, when pushed and asked if i would be covered for an accident like red wine on the carpet or paint spills, I was shocked to discover I wasnt covered.
Speaking to a knowledgeble friend about this who had a past period of employment in Insurance, he told me the Insurance guy was keeping his commision high by changing every three years, 1st year 20% of Premium, 2nd year 15%, 3rd 5-10%. thereafter no commision!! So in his interests to sell new provider to me, but the only way to continually get a cheaper product was to dilute the cover , til eventually I wasnt only just about barely covered.
Needless to say I learnt a lesson, I scutinise everything now, I dont rely solely on any one piece of advice, I do my homework!! I am not tarring all Insurance Sales with the same brush but You have been warned.

law is going to say you have to have insurance then the government should set out what you pay. i.e. £X per square foot ground floor, slightly less next floor, less each floor on, plus so much for garden space.
critical illness insurance

People always impressed with company's logo design and they buy products from them.

Price comparison sites are misleading but there are a rare few that actually do want you to find the best deals. i came across a company called and they found me a very cheap life insurance policy.  The bigger companies online presense are that big that people will keep going back.