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FSA finds price comparison sites treating customers unfairly

The Financial Services Authority has written to 19 firms operating insurance price comparison websites to highlight concerns about the fair treatment of consumers.

It says consumers may be being misled about the services they are receiving from price comparison sites, for example, they may believe based on the claims made by price comparison sites (or the absence of any statement to the contrary) that they are receiving a quote based on their individual demands and needs when they are actually receiving an illustrative quote based on a set of generic risk criteria.

Consumers may be unable to claim benefits against a policy purchased through a lack of opportunity to disclose all material facts, causing an insurer to refuse to pay out in part or in full on the benefits due under a policy.

It says price comparison firms enter into ‘white labelling’ contractual arrangements without fulfilling their obligation to counter the risk of financial crime. They could be assisting unauthorised firms in arranging or advising on contracts of insurance, against which a consumer may not be able to make a claim.

The letter contains proposed guidance and highlights some concerns the FSA has around the fair treatment of customers. It also asks firms to think carefully about whether they are introducing, arranging or even advising customers on purchasing a contract of insurance – and whether they need to reflect that with a change in permissions.

Firms now have until August 8 2011 to respond to the proposed guidance.

As well as asking firms to consider whether or not they need to extend their permissions it also sets out examples of good and bad practice.

Some of the areas the FSA has highlighted include:

  • Making it clear that firms should take responsibility for checking eligibility or disclosure, rather than putting the onus on the customer;
  • Reminding firms to check whether they hold the correct permissions, in particular where they may be inadvertently giving regulated financial advice without holding that permission;
  • Reminding firms who are using a ‘white label’ service to make it clear to customers which firm they are actually dealing with and who they should complain to should they wish to do so; and
  • Reminding firms that use a ‘white label’ service to check that their provider holds the necessary permissions to conduct regulated activity.

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  • petrometro 12th January 2012 at 7:24 pm

    well, if it gets a very bad opera singer off the screen and is seemples as well as sticking Peter Jones into a supermarket trolley, for good, then I’m for it!

  • Bob 10th June 2011 at 9:43 am

    I Agree with Peter except “the Muppets bit”
    THe FSA are a over paid if not highly paid quango cronies.
    Muppets their are not but blood sucking leaches they are, sucking the very life out of IFA comunity and when all the IFA’s are gone what then maybe the FSA cronies will pat themselves on the back and take larges bonuses

  • peter 9th June 2011 at 11:14 am

    A bit late the FSA have noticed that tens of thousands of customers have used these sites to buy inadaquate or inappropriate cover…
    If only there were any advisors left in the industry to help them. Sorry but the FSA’s made sure clients have been driven like sheep to buy on a Non advised basis. What else happens when you decimate the industry.
    Let’s all claim against the FSA for failing to take TCF seriously….kick them out of Canary Wharf and shame them for the usless bunch of muppets they are!!

  • paul S 8th June 2011 at 4:16 pm

    Hi Matt

    u may heave seen this one, just in case you need it for the ZS man

    Paul