The British Insurance Brokers’ Association (Biba) has welcomed the FSA's guidance issued today for insurance price comparison websites.

The FSA said in a letter to comparison sites that it has found failures to comply with its rules which could result in consumers being treated unfairly.

Biba said it first highlighted the issue of consumer detriment from comparison websites in 2008 and that it is "delighted" that the points raised have been recognised in this consultation.

The proposed guidance means that comparison websites may need to review their disclosure documentation, sales procedures and terms and conditions in order to comply with all relevant regulatory requirements.

These include customer eligibility, status disclosure, advice suitability and providing a proper statement of demands and needs.

Biba chief executive, Eric Galbraith, said: “Our concerns from 2008 have focused on the gap developing between the pace of technological change and the regulations which were written in 2005.

"We are pleased that the FSA recognise the price comparison website activities to be more than simply introducing and we trust that the steps that they are taking will close this gap.”

Graeme Trudgill, Biba's head of corporate affairs, said: “For the FSA to say that comparison websites are falling short of their regulatory requirements is of great concern and we strongly believe that these recommendations must be implemented by the sites without delay.

"We think it is particularly important that the FSA has highlighted a concern that we share, where in many cases questions are pre-populated with default answers.”

In its letter to comparison sites, the FSA said consumers may be being misled about the services they are receiving from these sites.

It also said that consumers may be unable to claim benefits against a policy through a lack of opportunity to disclose all material facts and that there could be confusion about which firm to complain to and whether they have the right to go to the Financial Ombudsman Service.

Steve White, Biba's head of compliance and training, added: “This is a really important step in consumer protection. This should lead to greater clarity for customers in terms of who they are dealing with and the policy that they are purchasing.”

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