Why Are Insurance Comparison Sites Failing?

Following a report from the FCA, I ask on the Kiran Trivedi blog this week, why are insurance comparison sites failing, and what could it mean for you?

Kiran Trivedi Always Tells You to do Your Research!

The best way to protect your personal finances is to budget. To effectively budget, you need to root out the cheapest deals possible; which is why I’m always telling you to do your research!

One effective research tool at your disposal to help you lower the cost of insurance, is insurance comparison sites.  In theory, they help you compare and contrast insurance policies so you can find the most cost effective one for your circumstances.

FCA Finds Insurance Comparison Sites are failing.

In practise, however, it appears that insurance comparison sites are failing; at least according to the Financial Conduct Authority (FCA), who recently reviewed 14 price comparison sites.

Last week, the FCA went on record, suggesting that instead of helping consumers, as they are supposed to, they could actually be confusing them further. The regulator claimed that these sites were failing some standards, providing “unclear” information, and that therefore, customers were not being given the information they need to make an informed decision.

The BBC recently reported that Clive Adamson, the FCA’s director of supervision, spoke out on the report’s findings, saying that "our review found that they were not meeting our requirements in delivering fair and consistent outcomes for consumers."

A Conflict of Interest?

Furthermore, the FCA suggested that some insurance comparison sites failed to point out a conflict of interest to their customers. However, the regulator went on to reveal that there was no evidence to suggest these companies had made a profit from this potential conflict of interest.

It’s important to note that some sites do flag up this conflict; however they often make it as hard to possible to find. Gocompare, for example, are 50% owned by insurance company Esure. The site does point this out, but only in the small print.

What Does This Mean for Your Personal Finances?

So what does this mean for your personal finances? Essentially, it could mean that you are not getting the most value for money from these insurance comparison sites, as you are making decisions on who you find to be the most cost effective insurer, based on potentially misleading information.

This is why I’m always telling you to do your research here on the Kiran Trivedi blog, if you want to protect your personal finances. Only once you’ve rooted out all the necessary information, can you make an informed decision on how best to save money on your household budget.