It is good to hear that the FSA intends to review the price comparison website market, after years of complaints about the lack of  independence and accuracy of information provided by certain websites.

The price comparison market has grown exponentially over the last few years, with two thirds of people using a comparison site before buying home or motor insurance.

Having studied 17 insurance comparison sites, comprising 95 per cent of the market, the FSA said results were mixed and that it had found evidence of sites failing to make details of insurance deals clear, and  providing quotes which were no longer available.

The review was triggered by research by the British Insurance Brokers’ Association, whose members have encountered increased competition from comparison sites.

The FSA’s research found that consumers often had difficulty accessing and understanding the small print of policies offered online and that headline grabbing quotes often applied to only a very small group of consumers.

There is also the issue of whether such sites are ‘treating customers fairly’ which the FSA is now monitoring more closely. There was also found to be a lack of transparency as to what extent the sites were truly ‘whole of market.’ 

Some sites require insurers to pay a fee to have their quotations featured, leading to some insurers, such as Direct Line being excluded. Defaqto, which is entirely independent and whole of market and supplies the FSA with comparison data for mortgages, savings, annuities and some investment products, has queried the independence of certain comparison sites and wholeheartedly welcomes the FSA’s long overdue review.

Many of the FSA’s comments  reflect  the findings of Defaqto’s own studies into this area, both in October 2007 and in its latest Insight Report ‘UK Motor Aggregators 2008 - Still much to do.’ which is due to be published next week.

The forthcoming report from Defaqto studies the workings of 41 separate motor insurance aggregator websites, and looks in detail at how they perform over 35 separate criteria. “In October 2007 we discovered a number of serious issues with the way some aggregator websites worked.

The findings in our latest report show that many of these issues are still with us,” says report author Mike Powell,  principal consultant at Defaqto.  www.defaqto.com  allows customers to check some of the most important elements of cover for all comprehensive motor insurance policies held on its Aequos Database, as well as many other financial products.