James Daley

By James Daley

Sad as it is, I've been waiting with baited breath for the conclusion of the Financial Conduct Authority's thematic review into the price comparison site market, which was published today.

It's something of a disappointment. While it rightly identifies that thousands of consumers are blindly buying insurance which doesn't meet their needs, it stops short of any remedies to help set this problem straight.

As I've written in this blog before, comparison sites have been a great innovation for consumers, helping them compare dozens of brands at the click of a button. But they have also driven some unhelpful behaviours by insurers, who regularly water down their levels of cover or add on extra fees and charges so that they can keep their headline price at competitive levels. The result - as the FCA acknowledges - is that many consumers obliviously end up buying products which don't meet their needs, or which end up costing them more than they had bargained for. Naturally, this is something that they often don't discover unless they come to make a claim.

An epidemic of mis-buying

The FCA's report concludes that comparison sites simply need to try a bit harder to highlight the differences between products. But this is unlikely to stop the current mis-buying epidemic. By the time customers have filled in the comparison site questionnaire, their appetite (and ability) for cross-examining features and charges between products is extremely limited. The FCA's research confirms that most consumers think insurance is much of a muchness -and it will be near impossible to break this perception down by simply providing a longer list of product features with ticks and crosses next to them.

What we need to work towards is a system whereby customers can be clear that they are at least comparing policies that meet their needs. This will require longer questionnaires at the front-end - but for a little extra pain, it will produce better outcomes. Comparison sites, of course, have no appetite to go down this road. The longer the questionnaire, the higher the drop out rate.

That's why we need the regulator to intervene.

Sadly, the FCA report shows little appetite to address the problem head on. Its thematic review highlights dozens of potential issues, but the conclusion is merely a commitment to work with sites over the coming months to create greater transparency. It's not nearly enough.