Fsa Calls For More Regulation Of Comparison Sites

The recent popularity of price comparison sites has led to a city watchdog planning to review the regulation of these sites, particularly insurance comparison sites to ensure consumers are not buying products that are unsuitable for their needs.

The recent popularity of price comparison sites has led to a city watchdog planning to review the regulation of these sites, particularly insurance comparison sites to ensure consumers are not buying products that are unsuitable for their needs.

The Financial Services Authority (FSA) are concerned that the way comparison wesbites, such as OnlyFinance, sell insurance policies, such as life insurance and car insurance, constitutes giving advice to consumers.

Another consideration is whether the assumptions some comparison websites use to base the quotes they provide on, could lead to consumers taking out unsuitable policies. The British Insurance Brokers Association (Biba) issued a warning that the existing rules governing websites are out of data as they were put into force before comparison sites began.

Insurance brokers must be regulated before they can offer advice on products, up to now websites can select and arrange policies for consumers without adhering to these same, high standards.

According to Biba, a third of customers do not know that comparison websites base the quotes they give to customers on assumptions, its warning was that if the rules covering websites were not updated soon customers could become tied into policies that do not offer the package or price that suits them the best.

Biba carried out research which found that most people who search a comparison sites do not find it clear what the differences between policies are. 6% of comparison website users thought that the details of what is covered, and not covered, by each insurer were not clearly explained. 93% of people assumed that these websites were regulated ina similar way to insurance intermediaries.

The discussion that needs to be had, is how these websites should be regulated, and by who. Eric Galbraith, Biba’s chief executive said: “The current FSA rules were written prior to the growth in aggregator sites. I believe the regulator should now look again at developing more appropriate regulations to ensure that consumers are being afforded suitable protections.

"There are still too many people logging on and making a decision solely based on the price of a policy rather than the protections it offers them, and potentially buying an inappropriate policy."

Many people search these sites for car and van insurance, cheap life insurance or loans and make a quick and uninformed decision about their finances. Perhaps this is as much the fault of the consumer as the comparison sites. FSA commented that it had looked into the regulation of comparison sites before but was planning to review the way in which they are managed after these findings from Biba.

A code of conduct for online comparison sites was proposed last year, which would clarify how much of the market was covered by these sites and which companies they work alongside. The Resolution Foundation conducted research which showed it was often unclear to consumers how the products they were offered and recommended was influenced by commerical deals.

The MD of Confused.com, Debra Williams, agreed that the FSA rules that currently existed were not appropriate and she is keen for new regulations to be introduced. If comparison websites were managed in the same way as insurance brokers customers could have more faith in the advice they are given.

However the MD of Gocompare.com, Hayley Parsons, does not believe sny more regulations are required, she said: "All the major insurance comparison sites are already authorised and regulated by the FSA, as are the insurance companies and the brokers who appear on them.

"Price comparison websites have been a force for good in terms of transparency and allowing consumers to check their renewal premium against, typically, around 50 other insurers."