Aggregators in the hot seat

The inspectors are coming. Following the widely-publicised release of a report on consumers’ views of aggregators, the FSA has promised to investigate whether these sites are offering advice that should be regulated, and whether they are treating customers fairly. Here, Sarah Kennedy puts six likely questions to two of the major aggregators – GoCompare.com and Confused.com – and asks what their response would be.

1. Should all aggregator sites be FSA regulated?

Currently not all aggregators are directly regulated by the FSA, only those deemed to be providing advice. Many of the larger sites have volunteered to be regulated by the FSA whereas the smaller sites fall under what is called introducing appointed representatives. This means that although they are not directly regulated, the brokers and insurers whose products they list are.

Debra Williams, managing director of Confused.com, supports regulation in theory but believes it should be introduced carefully. “Comparison sites should be consistent, and adhere to common principles. However, the extent to which comparison sites are regulated is still to be confirmed,” she says.

“Overregulation might not be in the best interest of the consumer and may diminish the transparency and operation of the sites.”

Hayley Parsons, managing director of Gocompare.com, says: “From the start, Gocompare.com opted for full FSA registration and authorisation as we felt it was in the best interests of the consumer. Our everyday business is governed by the FSA’s principles for business and we take Treating Customers Fairly (TCF) very seriously.”

2.Should product details be included when a price is listed?

There has been concern that consumers focus too heavily on price while choosing an insurance policy. Biba would like to see information included with the quotes that would allow customers to make more informed choices.

But all the major players in the insurance comparison market are now providing more than just premium information, says GoCompare’s Parsons. “Our mission has always been to find customers the right product at the right price and our approach is to give people all the information we can on the product, the cover and the price, and let them probe the results, re-order them and interrogate them,” she says.

Confused.com’s Williams adds that at the point of purchase, the customer is transferred to the insurers’ own websites, in order to complete the sale. As Confused.com deals only with FSA-regulated insurers and companies on its site, this means the need for regulation is fulfilled, she says.

3. How are panel providers chosen?

Consumers should know whether this is an open process or if insurers are placed on a panel based on commercial ties, Biba believes. Parsons responds that Gocompare.com’s panel is open to all UK insurers, adding: “Gocompare.com has always been clear about the number of insurers listed on its website.”

Confused.com says a list of all car and home insurers is provided on its site which can be accessed from its homepage, and that it does not discriminate between insurers and welcomes new providers to its site.

4. Is there bias in how the products are displayed?

Consumer advocates have raised concerns over how the information on products is displayed to customers. Is this based on commercial ties, tenancy fees or price alone? Confused.com says it does not filter down choices and presents clients with a comprehensive set of questions to ensure the most accurate price possible.

“In addition to this, Confused.com provides helpful hints and ongoing customer support, in order to help to make the decision process as easy as possible,” says Williams. “We don’t give advice – the information which we offer is solely designed to give the consumer the tools needed to make an informed decision.”

Parsons adds: “In our view, comparison sites represent a huge leap forward in terms of transparency and, as a result, consumers are making more informed decisions than ever before.”

5. Are the premium and features of the policy clear?

The FSA would be likely to want to consider whether consumers are provided with enough information to choose a policy that best fits their needs.

The Gocompare.com comparison tables allow customers to compare 14 different policy features that are included with each motor insurance policy, including whether or not a courtesy car is included as standard, windscreen cover and whether the insurer has UK-only call centres, enabling customers not only to compare policies on price, but also on the cover available.

Confused.com says around 65% of its customers buy policies based on price, while 35% take other variables into consideration.

“Confused.com is conscious that not all customers tend to make decisions based solely on price; hence, we have added the compare and contrast facility to our website so that customers can also compare policy features in order to make an informed choice,” says Williams.

6. How does a comparison site make money?

The FSA would be likely to look at how aggregator sites charge insurers for appearing on their panels and whether users are informed of the commercial arrangements.

Both Confused.com and Gocompare.com operate a cost-per-sale model whereby they charge insurers a small fee for each sale that is made via its site. They don’t charge tenancy fees to appear on the sites and insurers only pay when a sale is made. The information is available on the individual websites.