The Financial Services Authority is warning price comparison sites that they may be flouting financial advice regulations when they lead customers to insurance policies.
The warning follows a review of 19 price comparison websites by the regulator, including market leaders Moneysupermarket, CompareTheMarket, Confused and GoCompare.
Last month, it was revealed that comparison sites are among the least trusted when it comes to handling customer marketing data, according to a REaD Group study.
The FSA has now written to operators which direct web users to home and car insurance providers after it found some websites were leading customers to inappropriate insurance deals. It found “failures to comply with our rules which could result in consumers not being treated fairly”.
Companies must have FSA permission to provide financial advice, but some price comparison website activity could amount to a regulated activity, it has warned.
Websites must make sure that they comply with their legal responsibilities and should not offer financial advice to customers unless they have permission to do so, the regulator warned.
“Consumers may be being misled about the services they are receiving from price comparison sites,” the FSA said in its letter. It warned that in some cases this could lead to people being “unable to claim benefits through a lack of opportunity to disclose all material facts”.
The letter went on to warn that “websites should be careful not to inadvertently promote particular firms through the prominent use of names or logos on generic pages, and should also avoid ‘pick of the best’ products or star ratings unless intending to give advice”.
Price comparison companies have until August 8 to respond to the regulator’s letter.
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