Consumer group warns on comparison sites

Financial comparison Web sites are misleading customers and often fail to provide the cheapest product available, according to UK consumer association Which? Money.

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Consumer group warns on comparison sites

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The consumer group checked the sites of the largest comparison sites - Moneysupermarket.com, Gocompare.com and Confused.com - for home contents, car and travel insurance policies, as well as loans and credit cards, to find out how prices compared and how useful they were for finding a suitable deal.

The survey found in most cases, the cheapest quote was different on each Web site.
The cheapest quote for a home contents policy varied from £51 on Gocompare.com to £71 on Confused.com. The cheapest standard-rate credit card varied from 6.8% APR on Moneysupermarket.com to 12.9% APR on Gocompare.com.

Which? Money says in some cases it was possible to get a cheaper quote directly from the insurer.

The survey also found that a true comparison was difficult as each site asked different questions and showed different product features. In some cases it was necessary to visit insurers' own Web sites to check details, such as the excess customers would need to pay if they made an insurance claim, says Which? Money.

"Different sites can give you vastly different quotes and often don't give enough information for you to make an informed choice," says Martyn Hocking, editor, Which? Money. "You need to use two or three comparison sites and check directly with providers to get the best quote, and remember that cheapest isn't always best - it's a false economy if you don't get enough cover for your needs or have to pay a huge excess if you claim."

Earlier this year the UK's Financial Services Authority (FSA) warned that some insurance comparison Web sites could be misleading customers by failing to provide clear and accurate information.

In a review of 17 insurance comparison Web sites, the watchdog said although all are "appropriately authorised" it found "mixed evidence in terms of the clarity, fairness and accuracy of the information given to customers".

The FSA will follow up the review by visiting individual sites to test whether the information they provide is appropriate. Examples of good and bad practice have were provided to firms to show the standards expected.

Last year UK financial policy group the Resolution Foundation called on price comparison Web sites to introduce a voluntary code of practice to ensure transparency in their rankings of competitive financial products. Research commissioned by Resolution Foundation shows that 45% of UK adults used a comparison site to help them make a financial decision in the last year.

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