Comparison insurance websites criticised by FCA
Price comparison insurance websites are not meeting consumers' expectations or providing them with appropriate information, a review by the Financial Conduct Authority (FCA) has found.
In a "thematic review", the financial watchdog analysed 14 comparison websites and found that some were failing to meet FCA regulatory guidelines and failing to provide clear information that would help consumers make informed decisions.
This lack of clarity was leading consumers to buy products without a real understanding of the features of their policy such as level of cover and excess levels, with many people solely focusing on the headline price and the company offering the policy.
According to the FCA, around a third of consumers use a price comparison website when buying their car insurance.
And while some websites did provide clear information, the level of clarity varied significantly depending on the provider, and some consumers had mistakenly thought that the website had provided them with the best policy quotes based on their individual needs, the FCA added.
Moreover, some websites that were owned by a larger insurance group did not make that relationship clear to consumers, which is against FCA rules, although the watchdog said it had found no evidence that firms used these relationships to their commercial advantage.
Fair and consistent outcomes
Clive Adamson, FCA director of supervision, said: "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 FCA did not name the 14 websites it reviewed, but market leaders include Moneysupermarket, Goompare, uSwitch, Comparethemarket and Confused.
The British Insurance Brokers' Association (BIBA) said Gocompare was the only comparison website to be accepted as an associate member of its organisation because it operates a "best practice approach to insurance comparison".
The trade body said it was unsurprised by the wider findings and urged the FCA to go further and "take firm action" against websites that do not currently comply with the watchdog's regulatory standards.
BIBA executive director Graeme Trudgill said: “Our member insurance brokers have highlighted the issues with comparison websites for a number of years. We initially raised concerns in 2008 because we identified that there was a gap developing between the pace of technological change and the regulations which were written in 2005. We are pleased that the FCA is dealing with these issues."
This is more usually a feature of car insurance but it can also crop up in contents, mobile phone and pet insurance policies. An excess is the amount of money you have to pay before the insurance company starts paying out. The excess makes up the first part of a claim, so if your excess is £100 and your claim is for £500, you would pay the first £100 and the insurer the remaining £400. Many online insures let you set your own excess, but the lower the excess, the more expensive the premium will be.