Financial watchdog to investigate price comparison websites

The Financial Conduct Authority (FCA) has launched an investigation into price comparison websites, following reports that several of the largest sites are owned by the insurance companies they recommend.

The FCA will review 14 of the UK’s largest comparison sites – which account for 90 per cent of the market – and look at how key information is presented and whether customers are being given the fairest deal.

Some 20 million people use price comparison sites every year, with insurance policies ranked by price and cover type. However, some market commentators believe that too much emphasis is put on headline price, which results in customers getting the wrong cover and being left out of pocked when it comes to making a claim.

Concerns over the ownership of price comparison websites will be scrutinised, along with any potential conflicts of interest when it comes to commission–driven deals when customers are encouraged to take out specific car policies.

Clive Adamson, the FCA’s director of supervision, said: “We’ve all used a price comparison website so we know how simple they make buying motor, travel or home insurance. We don’t want to lose that convenience, but we do need to ask the question, 'does cheapest equal best?'

"We want to get to a place where consumers that use these sites buy with the confidence knowing that they have all the relevant facts."

The review will conclude in early 2014 and the FCA will carry out an in-depth consumer survey to understand what the public want from comparison websites and how they might be improved.