Do price comparison websites really find the best deals?

By Fergal Barry-Murphy. Published on February 4, 2008 This post currently has no comments.

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If you shop online for your personal finance products, you have undoubtedly come across price comparison websites. These can save hours of wading through websites or on the phone trying to track down the best deal. However, whether these websites will really find you the best deal has been called into question recently. We take a closer look at price comparison websites.

For the modern consumer, price comparison websites provide a quick and easy way to find good deals online. These websites compare the prices of just about anything you want to lay your hands on, and there are a select few heavy-hitters that currently dominate the financial products comparison niche.

And while they are certainly convenient, there is some concern as to whether they are consumer-friendly. The Financial Services Authority (FSA) recently announced that it is going to examine the rules governing websites that compare insurance products.

Insurance product comparison websites work in similar ways. You enter your details into an online form and the website compares the products from the insurance companies that it is affiliated to and then quickly displays details of the available offers.

At this point you will be able to view the policy details; amend details; buy the product; save it until later; or simply take no action at all.

The recent action from the FSA comes following a complaint from the British Insurance Brokers' Association (Biba) that ranking products online constitutes giving advice on the part of the price comparison websites. Biba argues that this is leading to consumers buying unsuitable products. By law, insurance brokers must meet strict regulations if they wish to give advice.

If the FSA agrees with Biba, then it is likely to impose much stricter guidelines on the price comparison websites.

While the transparency between the prices of various products that price comparison websites provide is to be welcomed, it is sensible to be cautious. Such is the weight that these websites carry in the insurance industry, some insurers are actually paying to get their products listed even before any purchases are made through the website. This leads to some concern as to whether the price comparison websites are genuinely offering the best deal, or whether they are favouring certain insurers.

So, try to keep an open mind when using insurance price comparison websites. Check to see if there are insurers that are not included in their search that you think might offer you a better deal. And do not just limit yourself to one price comparison website, try a few.

Also, it is sensible to approach the insurance companies, or other brokers directly, to see what price they can offer you.

One of the FSA's biggest concerns is that consumers are buying unsuitable products. When using price comparison websites there is no broker or telephone representative to talk you through the ins and outs of the product you are buying. The information is available to you, but it is up to you to read it and make sure you fully understand the product you are buying. So, before clicking on the buy button make sure that you have the level of cover that you really want, and that you are not paying for anything you do not need. Remember, cheapest may not be best.

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