Money
Getting the best deal
Insurance sites urged to give customers a good deal
Insurance comparison websites have been issued a stark reminder to treat customers fairly in a probe by city watchdog, the Financial Services Authority (FSA), writes Holly Thomas
An investigation found evidence of both good and bad practice, but the regulator is looking for all websites to ensure that users are given a good deal.
The FSA examined 17 different sites and is concerned about the clarity, fairness and accuracy of the information on offer.
One of the main problems is that the price that is first quoted can change considerably once the application is passed through to the insurer.
This can be because the comparison site uses unrealistic assumptions, or because extra fees are added later, such as for paying the premium monthly rather than annually as a lump sum.
Some automatically calculate the premium including a high excess - which brings down the cost of the policy but is not suitable for everyone.
The watchdog warned that such incorrect, or out-of-date information could be misleading to consumers.
Ed Harley, the FSA's head of financial promotions, said: "We expect comparison sites to provide information that is clear, fair and not misleading.
"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's covered by a policy, and not just focus on the price."
Almost 25 per cent of all private motor insurance sold in 2007 was through a comparison site, accounting for 30 million quotes.
However, consumers using these sites must take care not to simply be drawn to the cheapest because cut price cover is a false economy is you need to make a claim but find you are not covered.
Steve White, the British Insurance Brokers' Associaition head of compliance and training, added: "This is a great start, but the FSA must go further. Like brokers, comparison sites should guarantee their quotes.
"We are delighted that the FSA has stressed the importance of advice when purchasing insurance. It is vital that consumers focus on the level of cover provided by a policy, not just the price."
Research by BIBA earlier last year showed potential for serious consumer detriment across insurance comparison websites.
The FSA's consumer website - www.moneymadeclear.fsa.gov.uk - provides help for consumers on purchasing insurance through comparison websites.
* Holly Thomas is the deputy personal finance editor of the Daily Express and Sunday Express. Her opinions are her own and for general information only. Always seek independent financial advice.
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