The Financial Services Authority (FSA) has warned insurance comparison websites to comply with its good practice rules, or face a crackdown by the city regulator.
As the insurance
comparison industry has expanded in recent years, the FSA has carried out a fresh review of the sector. The review focused on 17 insurance comparison websites and strived to ensure that all are providing the consumer with fair and accurate information.
According to this latest review, insurance comparison websites accounted for almost 25 per cent of all private car insurance
sold in 2007. And, due to their large insurance market share, the FSA, whose aim is to protect the consumer, felt a practice review was required.
The review found that all 17 of the websites investigated were appropriately authorised by the FSA, however, "there was mixed evidence in terms of the clarity, fairness and accuracy of the information given to customers."
In its report, the FSA focused on several areas highlighting fairness and accuracy, including whether consumers are encouraged to consider features other than price and whether they are clear on the level of excess applied to different insurance policies.
In response to inconsistent good practice, the FSA has issued examples of good and bad practice to ensure that comparison websites comply in the future. It also urged such websites to constantly review their sites and make sure that their information is correct.
If these measures are not taken, the FSA warned that it would perform a series of 'thematic' firm visits to test whether individual firms are meeting its expectations. Ed Harley, the FSA's head of financial promotions, said:
"We welcome innovation and competition in the rapidly expanding insurance comparison website market. However, we are keen that the market develops in a way that ensures customers are treated fairly, and expect comparison sites to provide information that is clear, fair and not misleading."
Commenting on the review, director of Fairinvestment.co.uk, James Caldwell, said: "It is reassuring to know that the FSA are keeping an eye on the steadily increasing number of insurance comparison sites. We believe that the fairness and accuracy of the information we provide to consumers is paramount and are keen for the FSA to enforce this in all comparison websites."