Some price comparison websites are failing consumers, the City watchdog warned this morning.
It accused sites that compare insurance quotes of “failing to meet consumers’ expectations of them and, in some cases, the FCA’s regulatory standards”.
It said the websites did not always ensure that consumers were given the information they need to help them make informed decisions.
By failing to provide clear information, the websites are increasing the risk that consumers may buy products without understanding whether they were getting the right cover or level of excess, for instance.
In particularly the focus is put on headline price and brand when consumers should be made more aware of crucial product features such as policy coverage and terms.
The watchdog looked at 14 price comparison websites between December 2013 and April 2014 and found several areas of concern.
For starters the websites do not make clear their role, leaving some consumers mistakenly believing that the quotes were the best policy for their individual needs and that the site had assessed the suitability of the policy for them.
On top of that some sites owned by an insurer or broker, do not disclose the potential conflict of interest, which is against FCA rules.
Clive Adamson, FCA director of supervision said: “Our research found that price comparison websites are not meeting our requirements in delivering fair and consistent outcomes for consumers. We also found that consumers had a number of misconceptions about the services they provided.”
He warned price comparison websites to take on board the findings of the review.
“It is 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.
Hayley Parsons, CEO and founder of Gocompare.com, said in response to the FCA's comments: “We regularly update our services to reflect customers’ evolving needs, but we will be reviewing the findings of the FCA’s report, as well as taking part in the discussions to be held at the associated seminar today.”
Michael Ward, managing director of PayingTooMuch.com said: “We share the concern that consumers are focused on headline pricing and brand distracting them from crucial product coverage and terms.
"With travel insurance, for instance, the cheapest policy is no good if people do not disclose their pre-existing medical conditions when buying as this can result in serious disappointment at the time they need to claim."