Are you really being misled by price comparison sites?
Author:Paul Cartwright
Posted:27th January 2012
Category:Van Insurance
The news this week that Argos has had to suspend its insurance price comparison offering has fuelled the debate over whether consumers' needs are being met.
The Financial Services Authority (FSA) crackdown on aggregators has forced Argos to take its ArgosCompare.co.uk offline. Once a review has been completed with BeatThatQuote, the aggregator that powers the service, the retailer plans to relaunch the site later in the year.
BeatThatQuote hit the headlines in 2010 after Google paid £37.1m for the company, despite posting losses of over £250,000. Google has been reluctant to divulge its UK aggregator plans, but this latest crackdown will undoubtedly be a blow, especially as French insurer Covea is due to launch what it describes as the most user-friendly comparison site on the market later in the year.
The FSA issued extensive guidance notes to aggregators in October 2010. Whilst the concerns focussed mainly on authorisation and practices, they warned that customers might not be getting what they want:
- Consumers may be being misled about the services they are receiving from price comparison sites, for example, they may believe based on the claims made by price comparison sites (or the absence of any statement to the contrary) that they are receiving a quote based on their individual demands and needs when they are actually receiving an illustrative quote based on a set of generic risk criteria
- Consumers may be unable to claim benefits against a policy purchased through a lack of opportunity to disclose all material facts, causing an insurer to refuse to pay out in part or in full on the benefits due under a policy
- Price comparison firms enter into “white labelling” contractual arrangements without fulfilling their obligation to counter the risk of financial crime. They could be assisting unauthorised firms in arranging or advising on contracts of insurance, against which a consumer may not be able to make a claim
- Consumers of both white label and price comparison sites may be confused as to which firm to complain to and whether they have the right to go to the Financial Ombudsman Service
Effectively, the FSA are unhappy that many material facts are hidden away as assumptive questions in an effort to shorten the question set. The consumer's attention is largely drawn away from this area, reducing the opportunity to divulge full risk information and giving rise to the possibility of a future claim being rejected.
UK Insurance Aggregators 2011, a recent report published by Datamonitor, indicates that 56% of all car insurance sales were instigated through comparison sites, making them responsible for close to £5bn of car insurance sales in 2011 alone. This figure is predicted to rise to 61% over the next two years.
It is little wonder then that the FSA have an increasing interest in the activities of price comparison sites. BeatThatQuote and Argos have been the earliest victims of the crackdown, but are the bigger players likely to fall foul of the regulator in the coming months?
Staveley Head is a leading provider of Van Insurance in the UK.
For more information regarding this article, or to compare Van Insurance quotes, contact Staveley Head on 0845 017 9991.