The millions of pounds they spend on advertising and the “A-list” names that feature, such as Nicole Kidman and Arnold Schwarzenegger, are a measure of the sector’s rapid growth over the past decade. They also suggest it’s a competitive market, which should, in theory, mean it’s working well for consumers.
So why is the Competition and Markets Authority (CMA) investigating it? Well, there are also quite serious concerns about the way they operate. The emphasis on price has resulted in the hollowed-out insurance policies, where key features have been quietly removed or costs hidden in order to keep the headline price down.
Some comparison sites will give prominence to certain providers or products where they have a commercial relationship, often at the expense of options that might better suit the consumer.
Similarly, products offered by firms that don’t have relationships with comparison sites will often be mysteriously absent from the search results.
The CMA might take a look at all that.
But another increasingly pressing issue is being ignored entirely – data. How comparison sites collect it, store it and use it.
A report by the UK Regulators Network, which set out recommendations for the CMA’s study, noted that people are concerned that sharing their personal data could result in unsolicited marketing. My own experience says they’re right to be concerned. I recently used two different aliases to run quote searches on four of the main comparison sites (for research purposes). Since then I’ve received spam emails every single day that are addressed to those two aliases, and from all sorts of companies.
We know that selling anonymised, aggregated data is a key part of the business model. There are greater restrictions on personal data, but these are being flagrantly abused by at least some comparison sites. The now defunct Office of Fair Trading warned comparison sites in 2012 to improve their data privacy and transparency, but little has changed. The result will, eventually, be a corrosive lack of trust.
However, the CMA doesn’t seem interested in looking more closely at the conflicts of interest and the anti-consumer practices inherent in comparison site business models. The Financial Conduct Authority has already taken a close look at comparison websites. But if it’s not been particularly impressed – concluding two years ago that they often failed to meet consumers’ expectations – it hasn’t done much about it.
There’s little prospect of the CMA being any more decisive, if its recent cop-out on the current account market is any guide.