Price Comparison Website Investigation

Price Comparison Website Investigation.

The financial industry regulator, the Financial Conduct Authority (FCA) has confirmed it is investigating price comparison websites (PCWs) as to whether they are treating customers fairly.

We have already seen a themed review of annuity comparison websites last year, our own website annuityratesadvice.com was the subject of a review to ensure that we were clear and fair to clients, which of course we are, now it is targeting bigger fish.

There are a number of huge motor insurance, household insurance, bank account and credit card sites with millions of users. The FCA is exploring whether the comparison sites are clear, fair and not misleading.

Apart from the usual requirements for qualified advice and non qualified guidance (where full commissions can still be paid), there are two core doctrines that the FCA requires all regulated firms to form part of their business model:

• TCF – Treating Customers Fairly – all firms must have written processes and procedures, that are regularly monitored, to ensure that all clients are treated in the same way and that the way information and services are delivered

• CFM – Clear Fear and Not Misleading – all firms must have written processes and procedures, that are regularly monitored, to ensure that all clients have information supplied to them in a clear and understandable format that again, is fair, and does not ‘hoodwink’ or mislead people into doing something that may not be in their best interests.

In short, the regulator is to review whether price comparison website systems are geared up to maximise profit first but are first and foremost run with the core principles being TCF and CFM.

Comment

We believe PCW’s offer an invaluable service to the consumer when searching for basic products but they cannot meet all needs given that some financial decisions are too complex to simple search and compare. Some PCWs claim ‘whole of market’ when they then promote other products above the results which is not clear or fair with a possible driver of more commission and profit. We will watch with interest.