Insurance websites ‘broke FSA rules’

Watchdog concerned about ‘fair treatment of consumers’

The City watchdog has uncovered compliance failures at price comparison websites for car and home insurance during a review of the industry and written to companies highlighting its concerns.

The Financial Services Authority said in its letter it had “concerns about the fair treatment of consumers” after a review of 19 companies last summer, par­ticularly where such websites made claims that could be interpreted as financial advice. “We found failures to comply with our rules applicable to the regulated activities of arranging and advising on insurance, and with obligations under the Financial Services and Markets Act, which could result in consumers not being treated fairly,” the letter said.

Price comparison websites such as, and, have been hugely successful in the UK, particularly for car insurance where more than half of policies are now sold through such sites, up from less than one-quarter just four years ago, according to industry estimates.

But they have proven a drag on insurers’ profitability because they allow cost-conscious consumers quick­ly to find the cheapest quote, which along with rocketing bodily injury claims has led to car insurance premium rises of more than 40 per cent on average during the past year.

But such websites have also led to industry concerns that they make consumers more willing to provide inaccurate or incomplete information in order to reduce their policy costs.

The FSA was concerned that consumers might find themselves uncovered because of “a lack of opportunity to disclose all material facts, causing an insurer to refuse to pay out in part or in full on the benefits due under a policy”.

“We are very conscious of our responsibilities to our customers,” said Admiral Group, which runs

“If our customers don’t feel we are treating them fairly they let us know and we try to address their concerns.”

But James Daley, money editor at Which?, has been calling for tighter regulation of such sites for the past few years and said this move was long overdue.

“Our concerns have been about the focus on price and people not being warned about [things like] the exclusions in cheaper policies,” he said. “There has been lots of room for consumer detriment.”

Moneysupermarket had no comment. GoCompare welcomed the review and said it would study the recommendations to ensure it was fully compliant.

The FSA said there were no plans to refer any individual companies to enforcement.

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