This is the article:
More than two-thirds of car insurance policies sold last year were taken out through comparison websites. So it's not that surprising that the Financial Services Authority has been keeping a close eye on the sector. The regulator has just finished taking its third look at comparison sites in as many years, and to be fair, it doesn't have much to say that it didn't say before.
It examined 17 sites out of more than 40. All, it said, were "appropriately authorised" though there was "mixed evidence" as to how clear, fair and accurate information given to consumers is.
The key worry the watchdog highlighted was that "consumers should shop around for the best deal, but it is important they compare what's covered by a policy and not just focus on the price".
Comparison sites broadly welcomed the findings. "It is encouraging to see most price comparison sites are treating customers fairly in terms of clarity and openness and the FSA deems no further action needs to be taken," said Richard Mason, managing director of Moneysupermarket.com.
He added that he "fully supports" any recommendations the FSA might make designed to help enhance the consumer's knowledge and understanding, adding that Moneysupermarket already includes some of these other factors in its comparisons.
Currently there are no plans from the regulator to do anything new to address its concerns, but the FSA said it will be keeping an eye on the industry.
Fair comparison?
So it's not exactly a clean bill of health, but no one's rushing to do anything about it either. How concerned should we be - and are there ways consumers can make the best of comparison sites while avoiding the pitfalls?
Let's make something clear before we do anything else. I think comparison sites are a great idea.
They have introduced competition into the ultilities market where virtually none existed before; they've made it a lot easier for people to compare banks and insurers and other financial service providers far more conveniently; and the truth is that a lot of the complaints about comparison sites do tend to come from the direction of those who have been put under scrutiny by them.
But that's not to say they couldn't be better.
Understanding the problems
First things first, it's useful to understand how comparison sites work. They're not charities offering this service out of the good of their hearts - they are commercial organisations.
They'll take information from a range of providers (but importantly, not all of them - we'll come to that in a moment). You input your requirements, and they attempt to find the best match for you.
You then click through to the website of the insurer (or other financial service provider) in question and buy your product. The comparison site gets commission on the sales, or sometimes even just on the number of people clicking on an insurer (known as "click-throughs"), in return. That's how they make their money.
It's worth bearing this in mind. Comparison sites don't keep this a secret, but they don't exactly flag it up either - and neither, for perfectly valid commercial reasons, do they reveal how much commission they're getting from different companies.
Objective analysis
So remember that there is a big incentive for them to push you in a certain way.
That doesn't mean that their comparison service is skewed - but you should be wary of all the other bumph that appears on sites, such as guides to buying various types of insurance or credit cards, or banners suggesting "our best buys" or "best personal loans" which may be nothing of the sort.
If it's decent information on financial products you're looking for, you'd be far better going to a genuine news site or flicking through the financial section of your daily paper than relying on a comparison site's content.
Accurate results
Another big complaint is that, particularly when buying insurance, you will often find that the quote you get when you click through differs to the one you get on the site.
The trouble is that buying insurance is a complicated business. Different insurers ask for different details, so to cut the time involved, the comparison sites make various different assumptions about the buyer, which will sometimes mean you get very different quotes.
It also means that when you go through to the insurer in question and give them your complete details, you might end up being asked to pay more.
Holes in the table
Another issue is that many comparison sites (despite the hype) don't actually cover every provider, so they don't give a sweep of the entire market.
This issue has been partly addressed in the energy market - watchdog Energywatch presides over a voluntary code whereby accredited energy comparison sites agree to include details of all providers, whether they get paid by them or not - but there's no such code for the rest of the industry.
But there is a fairly easy solution to both of these problems - just use more than one comparison site.
As for the few big brands that completely shun the comparison sites - Direct Line is the main one - just give them a call directly if you think that they're genuinely going to offer you a better deal.
Cheapest or best value?
A greyer area is the FSA's complaint that consumers are focusing on price rather than features included.
The rise of comparison sites clearly has an impact on the way that companies try to sell their products. If two-thirds of the industry's sales come from this source, then obviously insurers are going to try to boost their showing on the sites. Tricks include increasing the voluntary excess (the amount you have to pay before the insurance kicks in) and ditching features like courtesy cars.
But the truth is that insurance is a commodity product. Most of us hope we won't have to use it, so we just want to get it as cheaply as possible. And sadly, it's only when we do come to use it that we find out whether our provider is any good or not.
Similarly, banks use underhand techniques to creep up the comparison site tables - having savings accounts with short-term bonuses, or linked investment accounts, or strict conditions which only come to light when you actually apply for the account.
But this can hardly be blamed on the comparison sites. The banks have always used devious marketing to get onto the best buy tables - there's nothing new in that.
All this reflects is the fact that banks can't be trusted. And the more consumers come to recognise this, the more they will support those few financial institutions that actually provide consistently good rates and service - and the comparison sites will adjust their search criteria to reflect this.
Should comparison sites be regulated?
The FSA could step up regulation of the sites, it could perhaps insist on a certain level of presentation or come up with various other parameters to be followed.
But the point is that the comparison site market is very competitive and developing rapidly. Traffic is what matters to these sites. The more people who use them, the better the deals they can set up with partners. So in the longer run these sites make their money by giving consumers what they want - the cheapest and best product for them.
The best sites - the ones which provide the most accurate results, the best search options and which prove themselves the most trustworthy - are the ones that will survive. That process of evolution will work a lot faster and a lot more effectively if the FSA sticks to its light-touch regulation.
