Price comparison websites are facing FSA’s wrath over concerns that lower earning financial consumers are getting a raw deal.
The regulator has warned the firms operating these websites to ensure they offer fair guidance to new entrants and are compliant with current regulations.
In letters sent to the firms, the FSA has cautioned them against offering regulated financial advice without holding the necessary permissions. It has also sought to know if they were introducing, arranging or advising consumers on buying insurance.
The present communication from the regulator follows a review carried out by the regulator between June and September last year. The firms are required to respond to the proposed guidelines by August 8 2011.
Rather than trying to shed their responsibilities, price comparison websites should take the responsibility for checking eligibility and disclosure.
Websites using comparison tools of third-party providers must make it clear to customers who they are actually dealing with and whom to contact if they need to register a complaint, the FSA said. The websites also need to ensure that the provider has the necessary permissions from relevant authorities, it added.
“Firms must be able to demonstrate that they are consistently delivering fair outcomes to consumers”, the FSA had said in its guidance on treating customers fairly, effective from December 2008.
“Competition is good and these types of websites create competition, but I do not believe they offer fair competition because many just offer the best possible deals which are not necessarily what the client may qualify for”, said Dominic Basilea, financial planner for KDW Associates at Hertfordshire.
“Websites have to be clear about what they are doing, whether they are providing information and knowledge, which is good, or whether they are giving advice. They should not be giving full advice”, he added, clarifying the limitations of comparison websites.