The Financial Conduct Authority has begun a thematic review looking into insurance PCWs. The review, which will include 14 PCWs(representing 90% of the market) and a number of insurance providers, will gain a clearer understanding of whether the way information is presented gets consumers the fairest deal.
Clive Adamson, the FCA’s director of supervision, comments
"We’ve all used a price comparison website so we know how simple they make buying motor, travel or home insurance. We don’t want to lose that convenience, but we do need to ask the question, 'does cheapest equal best?'
"We want to get to a place where consumers that use these sites buy with the confidence knowing that they have all the relevant facts."
PCW's perform a valuable service for millions of people, bringing convenience and simplicity to buying financial products online. In fact, almost half of all internet users have used PCWs to research motor insurance, with four out of five going on to buy insurance through this channel. A quarter of all internet users have bought home insurance through a PCW
However, in line with its objective to protect consumers, the FCA wants to ensure that their rapid growth in popularity has not come at the expense of transparency and fairness.
A key concern is the expectation gap – where people believe they are getting a good deal because they are saving money initially, only to find they are not covered as comprehensively as they thought when they make a claim.
As part of its review the FCA will:
- Carry out an in depth consumer survey to understand exactly what people want from PCWs when they are shopping for insurance, how they use them, and how they might be improved;
- Look at how key information is presented, and whether that might lead to consumers not fully understanding the service they are getting;
- Understand if there is too much of a focus on headline price, and whether consumers may be misled into purchasing products or add-ons which do not meet their needs;
- Question firms about revenue generation to look at whether the customer or profit is really at the heart of a business model;
- Check for conflicts of interest, such as where a recommended insurer also happens to own the PCW;
- Look at the possible inappropriate use of consumers’ data, or people being directed towards unauthorised insurers; and
- Check firms are doing the basics, such as complying with all relevant FCA regulatory responsibilities and clearly explaining their role and complaints regime.
The thematic review will focus on motor, travel and home insurance because these are the most popular insurance products compared on, and bought via, PCWs. In addition to speaking with PCWs and insurers, the FCA will also engage with trade bodies, other regulators, and consumer groups.
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