Britain's growing number of financial comparison websites are in danger of misleading consumers, with the majority of sites failing to disclose their commercial agreements adequately, despite describing themselves as "independent".
According to research by the Resolution Foundation, published today, some of the UK's largest comparison sites guide users towards the providers with whom they have specially negotiated commercial contracts, rather than to the best-value products in the market. Furthermore, many fail to provide explanations of complex financial terms and conditions, and unnecessarily request personal consumer information before providing quotes on loans and mortgages.
The Resolution Foundation – an independent research and policy organisation, set up to focus on providing better financial resources for those on low and medium incomes – is now calling for the industry to sign up to a voluntary code of conduct to raise standards across comparison sites.
The report highlighted poor practice across all of the nine sites it examined – including the Financial Services Authority's comparison tables. In particular, it said the FSA tables were often slow to update rate changes on financial products, and were bad at labelling products clearly.
The research also revealed that the quotes provided on many sites do not correspond with the rates and prices actually received once the consumer went ahead with a transaction. All but two of the nine websites included in the survey failed to provide consumers with the price they were quoted. Moneysupermarket.com, which recently floated on the London Stock Exchange with a market value of more than £800m, was highlighted as one of the worst sites at explaining the meaning of financial terms included in their comparison tables*.
In a test that formed part of the research, kelkoo.co.uk was rated as " least favourite" by two groups of consumers who tried out and ranked the nine sites.
Clive Cowdery, chairman of the Resolution Foundation, said he believed the proliferation of comparison websites was a very useful development for consumers, but said standards clearly needed to be raised. "There's no question that the availability of these sites is good for consumers," he said. "But as the market grows, it needs to mature, and we think the way to do that is to simply make sure the sites are clear about what they do and how they earn their money. At the moment, it's not always clear who they have commercial agreements with."
Direct Line – one of the UK's largest insurers, which has persistently refused to be included on any comparison websites – said it agreed with the Foundation's sentiments. "We feel that people who use price comparison websites aren't always as well informed as they ought to be over what these websites actually offer or their affiliations to other businesses," said Gill Murphy of RBS Insurance, which owns Direct Line. "Anything that improves that understanding has to be welcomed."
Richard Mason, a director at Moneysupermarket.com, said he also welcomed the introduction of a voluntary code, claiming that his company was already in talks with the Association of British Insurers about drawing up some guidelines. "We look forward to the fact that most of our competitors will be forced to disclose that they are effectively run by insurance companies," he said. "Confused is owned by Admiral, Tesco Compare is effectively a front for RBS Insurance, Comparethemarket is owned by Budget. None of these are truly independent like we are."
* The survey also found that Moneysupermarket.com was 'best for additional consumer information and guidance'Reuse content