How we calculate our product ratings

The way that consumers buy financial products has changed over the past two decades. The growth of comparison sites has seen many more customers making their own choices when it comes to banking products, rather than taking advice.

In such an environment, customers are looking for shortcuts to make better decisions. Comparison sites have made it easy for customers to compare prices - but it's important that people can also compare products and brands on quality and service.

Our product ratings aim to help customers compare on quality - helping them to make better, more informed decisions.

We score products from one to five stars, and only rate products that are currently on sale direct to customers or through comparison sites.

How we formed our core criteria

We currently look at three product sectors - car insurance, home insurance (buildings and contents) and travel insurance. We'll be adding banking sectors, as well as more insurance sectors over the next 18 months.

We started our ratings process by compiling a comprehensive list of all product features for every product in the sectors we are analysing. We did this by analysing policy documents, and by mystery shopping. Unlike other ratings providers, we do not rely on information provided by companies, as this can be open to manipulation.

Once we had a list of all product features, we selected the most important features from these based on our own expertise, industry data, and customer research. These product features formed the basis of our ‘red line requirements', which must be satisfied for a product to qualify for a five star rating.

How we rate financial products

We rate all financial products by assessing them against our red line requirements.

We allocate a score of 1 per product feature which meets or exceeds the relevant red line requirement.

We allocate a proportionate score between 0 and 1 for each feature which is included as standard but falls under the relevant red line requirement. For example, in car insurance we expect at least £500-worth of cover for audio equipment. If a product offered £250-worth of cover, it would receive a score of 0.5 for this feature.

We allocate a score of 0 to each feature which is not included as standard, contrary to the expectations of a red line requirement.

Once all red line requirements have been assessed, we add up all the scores to provide a total score for that financial product.

We've deliberately designed our scoring system so it can't be gamed. Companies must meet all red line requirements to get five stars. This is different to some other ratings where a points scoring system is used - which allows companies to win more points by increasing cover that consumers don't use, while reducing it in core areas.

What our product ratings mean

Our ratings are a short cut to help customers make better decisions. However, in reality, every customer will have different needs, so for some people, a five star rating may go beyond their requirements.

Five stars A product that receives a five star rating is designed to provide enough cover in all areas where the majority of customers might reasonably need to make a claim. There may be circumstances where our five star rated products don't go far enough for individuals - but they should be adequate for most people, most of the time.

Four stars A product that is rated four stars will have missed out on one or more of our red line requirements. It will still have an above average set of product features.

Three stars A product that is rated three stars will be falling short on our red line requirements by a greater margin. However, it will still have an average level of cover - and may be adequate for many customers.

Two stars A product that is rated two stars is likely to fall short on a number of different criteria, and will have below average product features.

One star A product that is rated one star will miss many of our red line requirements. It may still be suitable for some customers, but potential buyers should take care to understand what is not covered.

Ratings calculation

For a product to get a five star rating, it must achieve the maximum number of points available.

This means it must pass all our red line requirements.

Products which do not meet these criteria will receive a four, three, two or one star rating.

These are allocated on a measure of how far away each product is from achieving the maximum score. In an example where the maximum score for a product area was 10, the scores would fall as follows:

  • 10 = 5 Star
  • 9 to 9.99 = 4 Star
  • 8 to 8.99 = 3 Star
  • 7 to 7.99 = 2 Star
  • Less than 6.99 = 1 Star

If you’d like to discuss using product endorsements on your marketing material, please email ratedbyexperts@fairerfinance.com or call 020 3026 8541.