Regulator’s review finds mixed evidence of information given to customers.
The explosion of price comparison websites could be halted by a regulatory report released this week, analyst Numis has warned.
The FSA has published a review of 17 price comparison sites, also known as aggregators, and raised a number of concerns. It found mixed evidence of the clarity, fairness and accuracy of the information given to customers. It will now visit firms to ensure the information they provide to the public meets regulatory requirements.
David McCann, analyst at Numis, expects the review to prompt minor modifications to the disclosure, presentation and accuracy on price comparison sites. He said: “For smaller, recent entrants with fewer resources, we believe such changes will be more burdensome and could limit their growth in the short term.”
Under FSA requirements, sites that compare price alone must clearly explain to consumers that they should also investigate product features.
The regulator also said that firms must ensure that assumptions used to generate quotes are reasonable, and firms should have systems in place to ensure all information provided is correct and updated regularly.
Larger, more established comparison sites have voiced their support for the initiative, which also has backing from Biba and Defaqto.
Mark Vile, marketing director for comparethemarket.com, said: “With so many mixed messages in the marketplace about price comparison sites, we’re delighted that the FSA has conducted a detailed review of this sector. There are certainly good and bad practitioners in our space, and it’s important for consumers to know which sites are the most trustworthy.”
Paul Baxter, director of commercial and partnerships at Tescocompare.com, added: “We strongly believe that clarity and transparency should be a core element of every insurance comparison site and we therefore fully support any steps the FSA may take to improve any current shortcomings.”
The FSA also carried out aggregator reviews in 2006 and 2007, but at the time concluded that no immediate action was necessary.
But findings from the 2008 review take into account the continued growth in the market, new entrants, and Biba research that called for tougher regulation of aggregators.