James Daley

By James Daley

Conflicts of interest seem to be a part of the fabric in today's complex corporate world - and never more so than in the financial services industry.

Although it's nice to fantasise about a eutopia where such conflicts don't exist, I force myself to be much more pragmatic. No one, and no company, can be truly independent - we're all shaped by our backgrounds, past experiences, and connections. The best way to deal with conflicts is simply to have them out in the open - to scream and shout about them - and show that you have nothing to hide.

Alas, transparency is not the strong suit of the financial services industry. Even those who appear to be on the consumer's side are not always as upfront about where their interests lie.

Who owns who?

Earlier this week, insurance company Esure (made famous through its adverts fronted by the late Michael Winner) announced it was buying out the remainder of the comparison site Go Compare. The result is that three of the UK's four largest comparison sites are now owned by insurers - with conflicts of interest abound.

Compare the Market is owned by BGL - which owns the broker Budget Insurance, as well as fledgling life insurer Beagle Street and a subsidiary called BISL, which provides the insurance services for a number of big high street brands such as M&S Bank, the Post Office and RAC. You can buy all these brands on Compare The Market - and while there's no evidence of any impropriety in the way BGL manages its complex web of brands, there's no mention of these conflicts on Compare The Market.

Confused.com, which is owned by Admiral - and Gocompare, which is soon to be 100% owned by esure - do at least disclose their conflicts in the About Us sections of their website. But they could certainly be more upfront.

The other major comparison site, MoneySupermarket, is listed on the London Stock Exchange - and so is thankfully subject to a much greater degree of scrutiny. It's not without its own conflicts - Aviva happens to be one of its largest shareholders - but its stake of just over 6% is unlikely to buy it any kind of say in the business.

Into the Sunlight

Comparison sites are generally a force for good for consumers. But its not always the case. All of the big four have beefed up their life insurance channels in recent months - often taking home commissions of hundreds of pounds for doing little more than matching up a customer with an insurer. If those same customers had bought their policies at Cavendish or Moneyworld, they would have paid a fraction of the price.

The conflict in this case is not about who owns their business, or which businesses they own - but more about the conflict between their customer and shareholder needs. If comparison sites are willing to take advantage of their customers here - it doesn't give me great confidence that they manage all their other conflicts in a manner that prioritises their customers, rather than their bottom line.

As Supreme Court Justice Louis Brandeis once said "Sunlight is said to be the best of disinfectants". It's time the comparison site industry came out of the shadows.