Lack of clear information means customers focus more on price and ignore other key policy features
An FCA review has found that some insurance aggregators are failing to meet consumers’ expectations and, in some cases, regulatory standards.
The investigation into price comparison websites (PCW) published today found that they did not always ensure that consumers were given the appropriate information to help them make informed decisions.
And while a few websites did provide this information, the level of clarity varied significantly depending on the provider.
The review also found that not all comparison sites that were part of a larger group of an insurer or broker disclosed this potential conflict of interest, which is against FCA rules.
However, the regulator found no evidence that the firms used this relationship to their commercial advantage.
The review looked at 14 price comparison websites between December 2013 and April 2014 and included in-depth consumer research with 50 participants.
In a statement today the regulator said: “The FCA is concerned that consumers’ focus on headline price and brand when using PCWs could distract from crucial product features such as policy coverage and terms.
“By failing to provide clear information, the websites are increasing the risk that consumers may buy products without understanding key features, such as level of cover or excess levels, and purely focus on the price.”
FCA director of supervision Clive Adamson added: “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.
“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 has asked price comparison websites to take action on the areas identified where they are not meeting the required standards to ensure customers get a product that meets their needs.
The other key findings of the FCA’s review were:
- Price comparison websites did not make clear their role in the distribution of the product or the nature of service they provided. For example, some consumers mistakenly believe that the price comparison website had provided them with quotes on the best policy for their individual needs and had assessed the suitability of the policy for them.
- While some price comparison websites had taken steps to comply with their regulatory obligations, they had failed to fully implement guidance published in 2011.