FCA review found price comparison sites did not regularly assess the permissions of insurers and brokers
Aggregators risk putting customers in danger of entering into insurance contracts with unauthorised entities with no regulatory protection if things go wrong, a review by the FCA has found.
In its thematic review into price comparison sites, the FCA said that although all aggregators reviewed carried out due diligence on the insurers and brokers on their sites, they did not regularly assess if the insurance providers continued to hold the appropriate permissions.
Some aggregators only carried out very basic checks such as ensuring that providers were on the financial services register and the due diligence sometimes included measures to counter the risks of financial crime.
Some went further to carry out credit and background checks. However, only one aggregator carried out due diligence on providers higher up the distribution chain, for example, where the provider was a broker and had its own panel.
The FCA said: “Where price comparison websites (PCW) are not carrying out adequate due diligence on providers, it exposes consumers to the risk that they may enter into an insurance contract with or through an unauthorised entity under which there may be no regulatory protection and may not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong. It also exposes PCWs to the risk of reputational damage.