A review into price comparison websites by the Financial Conduct Authority (FCA) has found that consumers are not given the appropriate information to help them make informed decisions about the products they are buying and had failed to implement Guidance published in 2011.
The review also found that a number of sites did not make it clear to consumers what service they provided, leading many to incorrectly assume that the prices and policies presented to them had taken into account their suitability for the product as well as their individual needs.
The FCA found that focus was mainly on price, while other important considerations such as excess costs for a claim are not factored in.
A number of price comparison sites were also found to have broken FCA regulation by failing to make clear the potential conflict of interest through ownership by an insurance provider.
The FCA’s director of supervision, Clive Adamson, commented:
“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.”
Head of Ask Insurance, Amanda Smith, agrees:
“It is easy for consumers to get drawn in by the low quotes and cuddly collectables given by online comparison sites. Especially, in the current climate, when families are working within limited budgets.
The idea behind them is based on the old fashioned insurance broker, who would take the customers information search a panel of providers with a view to find the most suitable product for the clients circumstances within their price range.
With the uprising of comparison sites consumers thinking they can do this for themselves often come unstuck when they try to make a claim. It is at this point they discover, to their cost, that the policy doesn’t provide the cover they thought. Or the policy has been loaded with large excesses, or a deferred waiting period. Sadly, at this point it is too late and what the consumer may have saved does not equal what they have now lost.
Having the right cover is always important especially when considering Life Assurance. Many people think they can get cheaper cover from comparison sites, discovering you have unknowingly chosen the wrong cover, at the point you’ve lost a loved one can be traumatic.
A professional qualified adviser can provide details of the most suitable policy based on price whilst making them aware of any exclusions and/or limitations.”