FSA's Review on Price Comparison Websites
Price comparison websites seem to be helping us more and more when it comes to online shopping purchases. Collating prices from different companies under one virtual 'roof' helps increase competitiveness between companies, often resulting in lower prices for the consumer. This is especially so when it comes to researching and purchasing goods of higher value, as well comparing services and necessary financial products such as insurance.
In January this year, the Financial Services Authority (FSA) decided to look at bringing in new regulations relating to insurance websites and services which are aimed at helping and offering more protection when buying financial products online. It was decided that in order to help people in the UK buy more suitable products and services, the Financial Services Authority announced that they would be looking further into whether the way the websites sold insurance constituted providing advice for the consumer.
This was brought to light due to the fact that many consumers may unknowingly be buying products that are unsuitable or surplus to their needs and requirements. There are also some questions surrounding the fact that the current laws utilised by price comparison websites to quote insurance are a little outdated. Decisions to bring in further regulations covering online shopping and comparison sites have not been welcomed by all concerned. However, in order to protect consumers, the general consensus is that updated laws - especially when buying financial services online - should be welcomed with open arms.
So following advice from the British Insurance Brokers Association, or BIBA, that current regulations were written before price comparison websites were in such massive demand. Recently the Financial Services Authority implemented the new regulations to help consumers avoid buying products that are unsuitable for our needs.
What Does This Mean?For online insurance purchased, figures suggest that most of us are logging onto insurance websites that generate quotes based on questions answered. Consumers then tend to opt for one of the lowest priced quotations without checking the 'dreaded' small print and the actual cover that is being offered. In most cases what this means is that we are putting a wealth of trust into online shopping and comparison sites without considering the more important issues of what we are covered for and if a policy is suitable. When it comes to buying insurance online, in the past some websites have not been covered by the same regulations as 'bricks and mortar' insurance brokers, meaning that some consumers have been left in the dark about what they have, or haven’t, purchased.
Although this is not true for major insurance company websites, what remains is that some websites may not have been regulated by the Financial Services Authority. This in turn means that the possibility is that people in the UK may have chosen unsuitable insurance cover because the price of the policy has been the major influence and concern in the decision making.