CMA to investigate price comparison sites but don't let that discourage you from switching with them

They've generally been a good thing but there are issues with the way they operate. The CMA's review could also help it to put right a mistaken ruling

Will the CMA's investigation into price comparison websites cramp the meerkats' style?

Price comparison websites are a thoroughly good thing for the most part, but so is the fact that the Competition and Markets Authority (CMA) has launched an investigation into them.

Here’s why. The likes of confused.com, gocompare.com switch.com, moneysupermarket.com and comparethemarket.com facilitate switching between providers across a huge range of marketplaces. Energy, insurance, credit cards, home loans, personal loans, broadband, they’re all covered, and more besides. Water may be added to their number if Ofwat can make it work.

As such they help their users get better deals, and perhaps better service too. They also play an important role in ensuring that providers pay a price for mucking things up, one that has far more impact than fines levied by regulators. You lose your customers, you lose your business.

The trouble is they are not an unalloyed blessing. They are a useful weapon in the consumer’s armoury but they are not necessarily the punter’s best pal.

If you’re comparing markets, you really need to try two or three of them to get the best out of them because they have a habit of throwing different deals up after you’ve given them your details. You could almost do with a Gocomparetheconfuseduswtichmarket site to tell you which one is best.

Users also need to be aware that their first priority is to make money, which they do by charging commissions to the companies they list. It is partly because of this that big insurers such as Direct Line and Aviva shun their services. If you want to compare their prices you have to go direct to them.

The CMA also recently ruled that they only have to list the deals from energy providers that make them money, which might make the best ones, sometimes provided by smaller outfits, hard to find.

In so dong it reversed an earlier ruling by energy regulator Ofgem, which (rightly) wants to encourage switching. That created quite the furore. The Energy Select Committee, in particular, was not best pleased.

This new investigation, we are told, is completely separate from that. The CMA simply wants to to “see what issues it throws up”. It is to be hoped that the latter issue will be one of those. The CMA says it wants to “consider how to maximise the potential benefits” of price comparison websites for consumers. So it surely ought to be. It will be if the CMA knows what’s good for it.

There are other issues it wants to look at, such as whether consumers need to be told how price comparison sites make money, and whether the arrangements agreed between them and the companies they list serve to enhance or restrict competition.

The last few sets of financial results I’ve seen from the companies that own price comparison sites have suggested that are doing a very good job of turning a profit. Is that just because more of us are using them (a good thing) or because they’re not competing with each other as effectively as they might be (less good).

An answer to that question, and to the others I've raised, would be very useful. So the CMA’s intervention is a timely once. But don’t let it stop you from logging on to switch in the meantime.