Price comparison websites have come under fire after a report by the Competition and Markets Authority (CMA) into the sector, with Compare the Market now understood to be under investigation for overcharging.
The CMA’s year-long report into the market found that, in most cases, consumers were often better informed thanks to price comparison sites as they make it easier to shop around.
This has also increased competition between providers, further reducing prices for consumers. However, in some instances they are not working in the best interests of their users.
The CMA has launched an investigation into Compare the Market which it believes could be quoting higher home insurance prices because of commercial arrangements with insurance companies.
These so-called “most favoured nation” agreements mean that insurers are only able to offer their best deals to one comparison site they have commercial links with.
While the CMA has not named the firm in its report, a source confirmed to Moneywise that Compare the Market is the site in question.
The CMA has also established some best practice rules for price comparison sites to use, including:
- Sites should be clear, accurate, responsible and easy to use.
- All sites should be clear about how they make money, how many deals they display and how they are order the results.
- Sites should be clear on how they protect personal information and how users can control its use.
- It should be made as easy as possible for people to make effective comparisons or use different sites, for example through better information about products.
Andrea Coscelli, CMA chief executive, says: “Our study has found that most people in the UK have used a comparison site at least once so it is vital that everyone gets the benefits they deserve.
“The good news is that more than 90% of the people we surveyed were very or fairly satisfied with the sites they used.
“But we have also found that improvements are needed to help people get even better deals. We have set out ground rules for how sites should behave, as well as being clear on how regulators can ensure people have a better experience online.
“We are also taking enforcement action where we suspect the law may have been broken.”
A spokesperson for Compare the Market says: “We welcome the CMA's conclusions that digital comparison tools are a force for good which lower prices for consumers and inject competition into markets.
“Compare the Market has some simple contractual arrangements with home insurers to ensure that our customers always get the lowest available price. We welcome the opportunity to discuss this further with the CMA.”