The UK's Financial Services Authority (FSA) has warned that some insurance comparison Web sites could be misleading customers by failing to provide clear and accurate information.In a review of 17 insurance comparison Web sites, the watchdog says although all are "appropriately authorised" it found "mixed evidence in terms of the clarity, fairness and accuracy of the information given to customers".
In its review the FSA examined whether consumers were encouraged to consider features other than price before purchasing products. The watchdog also looked at the clarity of the levels of excess that apply to insurance policies and whether firms have appropriate systems and controls in place for ensuring that key product features included in policies are correctly listed and that they correctly relay consumer information to brokers and insurers.
The FSA says it will follow up the review by visiting individual firms to test whether the information they provide is appropriate. Examples of good and bad practice have now been provided to firms to show the standards expected, says the body.
Ed Harley, head of financial promotions, FSA, says: "We welcome innovation and competition in the rapidly expanding insurance comparison website market. However, we are keen that the market develops in a way that ensures customers are treated fairly, and expect comparison sites to provide information that is clear, fair and not misleading."
"We recognise that many consumers use these websites to search for insurance products. Consumers should shop around for the best deal, but it is important that they compare what’s covered by a policy, and not just focus on the price," he adds.
The FSA launched the review after warnings from the British Insurance Brokers' Association (Biba) that the current Insurance Conduct of Business rules for "electronic introductions" are outdated as they were finalised prior to the development of price aggregation Web sites.
The trade body commissioned FWD Research to question 250 insurance customers on the issue and found that the vast majority of consumers - 93% - expect insurance comparison Web sites to be regulated in the same way as insurance brokers, but this is not the case.
Earlier assessments in 2006 and 2007 led the FSA to conclude that no immediate action, other than to follow the development of the market, was required.
Last year UK financial policy group the Resolution Foundation called on price comparison Web sites to introduce a voluntary code of practice to ensure transparency in their rankings of competitive financial products. Research commissioned by Resolution Foundation shows that 45% of UK adults used a comparison site to help them make a financial decision in the last year.
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