FSA to investigate price comparison websites
by Gill Montia
Story link: FSA to investigate price comparison websites
The Financial Services Authority (FSA) is to investigate claims that price comparison websites are encouraging consumers to buy the wrong kind of insurance.
The British Insurance Brokers Association (Biba) has asked the regulator to review its rules governing price comparison sites, arguing that many such sites are in effect giving financial advice.
The association believes that focusing on cost means that insufficient emphasis is placed on policy features.
As a result, consumers can be encouraged to purchase the wrong policy simply because of cost.
In addition, some price comparison websites base their quotations on a number of assumptions about the enquirer and this can lead to consumers being quoted a low price and ending up paying more.
Eric Galbraith, chief executive of Biba, say: “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 … 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.”
The FSA last reviewed price comparison sites in 2005, when it decided that no regulatory changes were necessary.
In research commissioned by Biba, 93% of consumers surveyed said they expect insurance comparison websites to be regulated in the same way as insurance intermediaries.