Comparison sites face FCA probe

The financial watchdog is launching a major probe into price comparison websites, amid fears shoppers are being hoodwinked into going for the cheapest deals which will not provide adequate cover.
Announcing the probe of 14 sites, the Financial Conduct Agency (FCA) said it would question company bosses about “whether the customer or profit is really at the heart of a business model”.
According to industry estimates, about 40% of all car insurance and a quarter of home insurance policies are bought online using price comparison websites.
An FCA spokesman said: “Price isn’t necessarily the best marker of an insurance deal. It’s all very well getting the cheapest insurance cover, but when you come to claim, if you find out that you can’t, then obviously that money’s been spent for nothing.”
He added: “When someone searches for something, are they necessarily getting the best deal for them, or are they just getting the deal the website wants to give them?”
A risk review in early 2013 highlighted that firms relying on automated comparison algorithms to serve millions at low cost might not be able to properly scrutinise their own practices.
The regulator has power to force changes in adverting and promotions or to issue fines in the most serious cases.
Clive Adamson, the FCA’s director of supervision, said: “We’ve all used a price comparison website, so we know how simple they make buying motor, travel or home insurance. We don’t want to lose that convenience, but we do need to ask the question, ‘does cheapest equal best? We want to get to a place where consumers that use these sites buy with the confidence knowing that they have all the relevant facts.”

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