Insurers and financial services providers use price comparison websites because they are a relatively cost-effective way of acquiring customers, Moneysupermarket chief executive Peter Duffy has argued.
However, Financial Services Consumer Panel member Johnny Timpson argued there was more price comparison websites (PCWs) could do to meet Consumer Duty requirements – citing the example of bereavement services.
The pair were providing evidence to the Financial Services Regulation Committee at the House of Lords as part of its Consumer Market Inquiry earlier this week.
Cheapest way to acquire customers
Last month as part of a previous evidence session, British Insurance Brokers Association CEO Graeme Trudgill told peers that PCWs can charge insurers and intermediaries multiple times for hosting their products and even do so without completing a sale.
However, Duffy (pictured left) who was appearing with fellow leaders from Compare the Market and Confused, appeared to dispute that.
Duffy said: “I think it may be helpful for the committee to understand why providers use comparison environments.
“We are the cheapest way for them to acquire customers.”
Duffy said that insurers and providers only make a payment when a customer decides to join their organisation and to buy their product.
He said this offered an alternative to third party media, brand advertising and Google pay per click marketing costs.
“That is why they like comparison environments, because it’s a relatively cost effective way for them to get customers to join them if their products are sufficiently attractive,” he added.
PCWs have been criticised throughout the evidence sessions with Fairer Finance managing director James Daley arguing they had resulted in a ‘hollowing out’ of private medical insurance (PMI) and protection products to facilitate their listing.
More to do on Consumer Duty
Speaking in the session immediately before Duffy, when asked specifically whether price comparison websites were meeting the Financial Conduct Authority’s Consumer Duty, Timpson told the committee that there was certainly more that they could do.
“I don’t think they’re doing enough,” Timpson said.
“I sometimes question the value because you’ve got all these different products. They’ve all got a Defacto five star which concerns me because I think consumers should not be basing a value judgement on if it’s five star or not.
“But certainly there’s a lot more that they can do in terms of providing consumers with support and that support is just providing me with what I’m covered for. When does the cover start? When does it stop and service?”
Service issues
But Timpson added there were also issues with the service these sites provide.
“For example, the Bishop of London’s commission on bereavement, [found] there were lots of issues with insurance policies not providing sufficient support to families on bereavement,” he continued.
“For example, in changing drivers on cars, on ensuring there was a continuation of cover while an estate was disposed of. These all became difficult.
“There was no bereavement helpline or bereavement unit and these are all things that I think needs rectifying.
“Equally, identifying vulnerable customers and particularly customers suffering from domestic abuse is an issue. So there’s lots to do.”
Timpson also used his session to argue that protection providers should publish the time it takes for them to pay claims.