Page last updated at 11:24 GMT, Thursday, 8 May 2008 12:24 UK

'Errors' in insurance price sites

FSA building
The FSA probe studied 17 price comparison websites

Some insurance comparison websites provide incorrect or out-of-date information, says the Financial Services Authority (FSA).

But others in the growing industry were clear, fair and not misleading to customers, an FSA investigation found.

The watchdog studied 17 price comparison websites and will now visit each individually to test the information they are providing.

These sites instigated 25% of all private motor insurance sold in 2007.

Clarity concerns

The FSA said that although all the sites were properly authorised, there was "mixed evidence" in the clarity, fairness and accuracy of information given to customers.

In a snapshot of the industry it found cases when:

  • Compulsory excess levels were excluded from the price, or incorrect
  • Warnings were issued to consumers to consider other factors than price, but with little follow-up information
  • Only a limited number of product features, such as price, were listed for customers
  • Quotes differed from the amount actually charged by a broker or insurer.

But the FSA said that all 17 sites were adequately authorised, despite concerns raised earlier this year by the British Insurance Brokers' Association (Biba).

The FSA wants the comparison websites to ensure that they are consistent in the level of detail they give on different policies, to ensure that the information they provided is correct and updated, and to highlight clearly any assumptions made to generate quotes.

Popular sites

The number of comparison websites has mushroomed over the last few years, as more consumers use them to find a cheaper deal on a range of financial products.

Why price comparison sites may not offer the best deals

Many sites receive a commission from the companies they recommend.

Insurance comparison sites generated an estimated 30 million private motor insurance quotes in 2007.

Earlier this month, the Centre for Competition Policy (CCP) at the University of East Anglia called for independent checks to ensure information on all price comparison websites was fair and accurate.

Latest review

Previous reviews of these sites in 2006 and 2007 by the FSA concluded that no immediate action was required, but now officers will visit sites individually.

"We welcome innovation and competition in the rapidly expanding insurance comparison website market," said Ed Harley, the FSA's head of financial promotions.

"However, we are keen that the market develops in a way that ensures customers are treated fairly, and expect comparison sites to provide information that is clear, fair and not misleading.

Hand on keyboard
Price comparison websites have soared in popularity in recent years

"We recognise that many consumers use these websites to search for insurance products. Consumers should shop around for the best deal, but it is important that they compare what is covered by a policy and not just focus on the price."

Biba welcomed the review, after its own research claimed that 84% of people using insurance comparison websites thought the details given on insurance policies could be confusing.

"This is a great start, but the FSA must go further. Like brokers, comparison sites should guarantee their quotes," said Steve White, Biba's head of compliance and training.

"We are pleased that the FSA is calling for comparison sites to give more information to consumers."

Ashton Berkhauer, insurance expert at price comparison site Uswitch.com, said: "We welcome any initiative that will result in increased consumer confidence and are happy to be actively involved in any consultations on this issue."


SEE ALSO
Price websites 'needed checking'
12 Apr 08 |  Business
Price comparison sites face probe
22 Jan 08 |  Business
Websites 'may hurt credit scores'
19 Sep 06 |  Business
Energy price websites get the nod
19 Dec 06 |  Business

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