Comparison sites have been a force for good for consumers. They’ve helped millions get into the habit of shopping around for new deals regularly, rather than simply slipping into a round of ever-increasing annual charges.
Yet as their power has grown, so their role as a consumer friend has diminished. The companies that flog their products through them tend to deal with them unhappily. One chief executive told me recently: “They position themselves as a service when in reality they are profit-maximising sales organisations.”
They do give you the opportunity to find a range of deals at the touch-of-a-button, which is hugely convenient. But the chances of actually finding the best deal through a comparison site are extremely slim.
That means if you’re relying on them to save you as much money as possible, you’re likely to end up disappointed.
The first thing to understand is that they are profit-making businesses. They make a profit by pocketing commission on every customer they pass on, whether it’s to energy firms, insurers, credit card companies or whatever.
That’s fine as long as customers understand that. But what’s not fine are accusations that they put the companies that pay the highest commission at the top of rankings, or leave off altogether firms that refuse to pay commission.
That means customers don’t get to see the best deals.
The latest accusations are that the sites ask users if they want to see tariffs they can switch to “today” or “now”. Then when people clicking “yes”, as all invariably do – after all, who wants to wait to switch? – the sites filter out the deals which do not earn the comparison site a big commission from the company.
There are also concerns that comparison sites encourage people to choose on price when doing so can be a costly mistake.
For instance a new 0.99 per cent mortgage launched today by HSBC is currently the lowest-rate charged in the market. But the deal is actually more expensive than others because it has a whopping £1,999 fee.
The simple solution is for comparisons to be based on the total cost of the deal, include all fees, charges and commissions paid. And crucially, commissions – which vary from around £40-£70 per customer - should be clearly signalled and detailed.Reuse content