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Categorized | Insurance

Watchdog probes price comparison sites

Posted on September 29, 2016

The study will focus on home insurance, broadband, credit cards and flights©FT Montage

The study will focus on home insurance, broadband, credit cards and flights

The UK’s competition watchdog has launched a probe into price comparison sites, which are an increasingly popular way of shopping for energy, broadband, insurance and credit cards.

The Competition and Markets Authority said on Thursday that it would look into how well these sites — which include Moneysupermarket, Compare the Market, Skyscanner and Kayak as well as apps such as Voltz — work for consumers. It stressed that it was looking at the market as a whole rather than specific companies.

    The study will examine how to improve the benefits these sites offer to consumers and will also look into the arrangements between the sites and the companies that sell products through them. It will also look at competition between the various sites and apps.

    The study will focus on home insurance, broadband, credit cards and flights, with an interim report due next March. Depending on the findings, the CMA could tell the sites to improve the information they give to consumers or recommend that the government changes the rules that govern them. It could also order a more in-depth study.

    Andrea Coscelli, acting chief executive of the CMA said: “Since emerging a decade or so ago, such tools have helped to inject significant competition into a number of markets, including private motor insurance . . . However, they have been more successful in some sectors than others. We want to understand why this is the case and whether more can be done to ensure consumers and businesses can benefit from them more widely.”

    “Some people have also raised concerns about certain issues, including whether consumers can trust the information that’s available, and the study will look at these issues too.”

    This is not the first time that regulators have taken a close look at comparison sites. Two years ago, the Financial Conduct Authority said that price comparison sites were failing to meet consumers’ expectations after an investigation into how they sold insurance. It was particularly critical of their failure to disclose important policy details.

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    Last year, the CMA closed an investigation that its predecessor, the Office of Fair Trading, had launched into online hotel booking sites.

    Matthew Donaldson, chief executive of Compare the Market owner BGL, welcomed the CMA’s latest move. “Anything that will raise the profile of comparison and encourage customers to switch is a good thing,” he said.

    Analysts at Credit Suisse said that the latest study was a “natural evolution” of previous probes. “We doubt the results will impede the ongoing structural growth seen within the industry although we acknowledge that any uncertainty is unlikely to be taken well,” they wrote in a note to clients.

    The CMA’s study comes at a delicate time for the industry. Insurance group Esure is planning to demerge Gocompare, its price comparison site, later this year while BGL, which owns Compare the Market, is gearing up for a flotation in the first half of 2017.

    Shares in Moneysupermarket fell 1 per cent on Wednesday.