Following its year-long investigation, the Competition and Markets Authority (CMA) has urged comparison sites to be more transparent about how they are paid and the results they display.
The regulator also called on comparison sites to be clear about how they protect personal data and recommended the Financial Conduct Authority (FCA) take greater involvement in the sector.
Alongside its final report, the CMA revealed it will be investigating one unnamed site for potentially overcharging home insurance customers as part of its market practices.
This involves potentially misusing so-called most-favoured nation status, in which the provider of a product is required to price that product via the comparison site as low or lower than the price at which the product is sold at rival outlets.
The CMA said it has previously expressed particular concerns where the rival outlets covered by the retail most favoured nation clause include rival comparison websites.
It will be working with the FCA which regulates the home insurance sector.
Concerns about website transparency were one of the key findings by the CMA.
In its final report it noted: “While most sites we looked at appeared to explain their role and provide useful results, we found some examples where they could be clearer about what they do and a few instances where they appeared to be inaccurate, unclear or possibly misleading.
It added that comparison sites were a good way of increasing competitive pressure on energy, telecoms, financial services and other suppliers, but if competition between themselves does not work well, people may not feel the benefits.
“We have strong concerns about some types of contract between suppliers and comparison tools which prevent suppliers from offering better prices on one than on another and can reduce competition between comparison tools.”
And the CMA revealed there are several other practices which it is keeping under review.
CMA chief executive Andrea Coscelli said the study had found that most people in the UK had used a comparison site at least once so it was vital that everyone saw the benefits.
“The good news is that more than 90% of the people we surveyed were very or fairly satisfied with the sites they used,” he said.
“But we have also found that improvements are needed to help people get even better deals. We have set out ground rules for how sites should behave, as well as being clear on how regulators can ensure people have a better experience online.
“We are also taking enforcement action where we suspect the law may have been broken,” he added.
The full list of CMA recommendations for price comparison sites is:
- All sites should follow our ground rules. They should be Clear, Accurate, Responsible and Easy to use;
- All sites should be clear about how they make money; how many deals they’re displaying and how they are ordering the results;
- Sites should be clear on how they protect personal information and how people can control its use;
- It should be made as easy as possible for people to make effective comparisons or use different sites, for example through better information about products;
- All regulators with a stake in this area should work together to ensure people are well protected.