Price comparison websites have come under fresh attack from the financial regulator, amid claims they do not give consumers enough information to make informed decisions about which product is best for them.
According to the Financial Conduct Authority (FCA), many sites offering insurance products try to gloss over additional costs, as well as exemptions and the level of cover provided.
Some sites have not even implemented guidance issued by the FCA’s predecessor, the Financial Services Authority, in 2011, it said.
FCA director of supervision Clive Adamson said: “Price comparison websites have increased in popularity among consumers with an estimated one third of consumers buying their motor insurance policy through them.
“They provide an important service for millions of consumers bringing convenience and simplicity to buying financial products online. However, 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. We expect price comparison websites to take on board the findings of the review. It is also important for consumers to understand that not all products are the same and the cheapest product may not always be the best for their needs,” he said.
The FCA said that research it had conducted showed some consumers “mistakenly believed” they had received advice or guidance from price comparison sites on what policies to select.
Among the other concerns raised by the regulator was a lack of sufficient data security in place at some price comparison sites it assessed.
“We found that a small number of sites did not have secure access controls to customers’ accounts,” the FCA said. “The only requirement was a combination of two or three pieces of information, such as quote reference, date of birth, surname, and postcode to access a customer account, and this information was readily available on the printed quote. This lack of access controls exposes the consumers to the risk of sensitive information being inappropriately disclosed and the sites to the risk of reputational damage if things go wrong.”
Three years ago, a survey by the REaD Group showed price comparison sites to be among the least trusted when it comes to handling customer marketing data.
The FCA called on price comparison website operators to address the concerns it raised and said it would follow up with individual sites it had assessed to review the steps they take to improve compliance.
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