Comparison websites may mislead customers
Customers taking out insurance policies such as motor and home insurance through a comparison website could have been misled, warns the City watchdog.
The Financial Services Authority (FSA) has slammed comparison sites for not providing enough information on general insurance policies.
Following a review into how comparison sites sell general insurance between June and September last year, it has written to the comparison sites warning them to review their practices, highlighting concern around the fair treatment of customers.
In its proposed guidance set out in the letter it says customers may not be getting full or correct information about a policy before buying it, and there is confusion over where to go to if you have a complaint.
The FSA is urging the websites to make it clearer that it is up to the comparison sites, not the customer, to check a customer's eligibility for any kind of policy and to make sure it is clear the information they provide is not interpreted as financial advice.
In addition, companies operating a 'white label' service - a host website sending consumers to other third party websites - need to check that each individual company is fully authorised.
Changes may have to be made in how the websites disclose documentation, their sales procedure and terms and conditions to make sure they are complying with the FSA.
The comparison websites now have until 8 August to respond to the FSA guidance.
Comparison sites falling short
The British Insurance Brokers' Association (BIBA) welcomes the FSA's guidance. BIBA says for the FSA to say comparison websites are falling short of their regulatory requirements is of great concern and it strongly believes these recommendations must be implemented by the sites without delay.
Steve White, spokesperson at BIBA, says: "This is a really important step in consumer protection. This should lead to greater clarity for customers in terms of who they are dealing with and the policy that they are purchasing."
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.