Call for tougher regulation of price comparison sites

Comparison sites are failing to provide consumers with the best deal and should be strictly regulated, Which? has said.

The Financial Services Authority warned comparison sites they must hold the correct permissions for their activities in June last year.

A Which? investigation has now established that most of the 11 most popular sites were using pre-selected answers and assumptions in their online forms for insurance products.

"This may make quotes appear cheaper, but can also lead to basic ‘one size fits all' policies that could be unsuitable for individual needs or even prove invalid in the event of a claim," the report said.

We want to see tougher regulation and monitoring of the non-advice price comparison sites to make sure they treat customers fairly and transparently as the advice portion of the market are expected to.

However what price comparison sites often neglect to make the consumer aware of is that their use prevents recourse to the Financial Ombudsman Service on the part of the consumer in the event of something going wrong.

If a financial product is purchased from a price comparison site , the consumer automatically sacrifices any right of recourse via the Financial Ombudsman Service because the purchase is deemed to have no advice process, ‘deemed an execution only transaction’, and execution only transactions have no right of recourse to the Financial Ombudsman Service.

As always thanks for your attention.

Mark (mark@themortgagemonkey.co.uk)