Price comparison sites are being investigated by competition regulators. Good. It’s about time there was closer scrutiny of these meerkat-loving, opera-singing, stiletto-twerking financial behemoths.
To be fair, this current investigation centres on ‘one or two’ energy price comparison sites who are alleged to have breached competition rules for online advertising.
This isn’t my main beef with these sites. On of the face of it, they have made shopping around for energy deals, car, home and travel insurance and savings and credit a bit easier.
But the assumption that they are speedy and hassle-free is nonsense.
If you have an hour or two of your life to fritter away log onto a couple of these sites and compare results. The first thing you’ll notice is that the ‘best buys’ they find can be quite different.
When it comes to insurance, for example, no one site covers the whole market. Most have short-term ‘exclusive’ deals with one or more providers. Meanwhile a growing number of insurers refuse to appear on these sites at all.
Until we get a price comparison site of price comparison sites, customers who are determined to get the absolute rock bottom price will need to scour several comparison sites, and contact a few insurers individually.
This means setting up passwords, tapping in contact details, date of birth, type of window locks, make of car, annual mileage, holiday dates and destination, children’s birthdays, medical history and in all likelihood your inside leg measurement multiple times.
Of course, you’ll also need to ensure you tick – or don’t tick – the various boxes that will stop the comparison site and ‘affiliated financial service companies’ bombarding you with unwanted spam.
And I’m sure I’m not the only one who, having found a decent deal, clicked through to the relevant provider (which involved re-entering all this data again) only to find the premium had jumped up.
But it’s not just the slog of it all. I’d argue the ubiquity of price comparison sites has altered the way financial service companies design their products, and we, as consumers, are all poorer as a result.
Those selling through comparison sites know if their product isn’t in the top three no-one will buy it. This has led to stripped down cover, and high excesses (the first part of a claim you pay yourself).
Recent research suggested some of the cheapest travel insurance policies don’t cover lost baggage, missed flight connections and medical bills. (Begging the question what exactly are you getting for your £13 single-trip policy?)
Similarly, many insurers bump up excesses, often using underhand tactics. Some price comparison sites let you stipulate what ‘voluntary excess’ you want to pay. But if you specify £250, the cheapest deals list a £250 voluntary excess and a £250 compulsory excess – meaning you pay the first £500 of any claim. How many people only realise they’ve been tripped up by this small print when they come to make a claim?
The price comparison sites have produced a plethora of insurance companies that are hardly household names: a quick search for travel policies revealed ‘best buys’ from InsuranceRepublic; Multi-trip.com; CheaperTravelInsurance.co.uk; InsuraTrip, Alpha and so on.
Some of these will be low-cost ‘brands’ owned by larger insurance groups.
You can’t help suspecting this may be to sidestep the inevitable bad publicity that might arise when holiday-makers, drivers or home-owners try to make a claim on ‘budget’ policies.
Many of these cut-price insurance deals or discounted electricity tariffs or cheaper mobile phone packages come at the expense of older, less internet-savvy customers — who are stuck on an out-of-date and overpriced deals from a more ‘trusted’ name.
Given all this, it was perhaps not surprising to learn this week that more than four out of 10 of us failed to switch our car or household insurance, energy provider, mobile, landline or broadband provider, credit card, or bank (be it for savings, mortgages or ISA) in the last 12 months.
Women – stereotypically seen as keepers of the household purse strings – are worse switchers than men. One in two didn’t switch these basic financial products in the last year.
It probably won’t surprise you that I am one of these recalcitrant non-switchers. It’s not that I have never switched these products in the past. It’s just that I’m fed up with the idea that we have to hop from one provider to the next every three months if we don’t want to be ripped off.
My experience – particularly when it comes to gas and electricity deals – is that savings can be scant and barely worth the hassle factor.
At the end of the day this carousel approach to personal finance benefits the price comparison sites (who earn commission on every sale made through their sites), not the vast majority of customers who want long-term good value deals.
It would be nice to see some insurers, energy providers and banks take comparison sites on at their own game and instead design products that offer decent service and a fair price year after year. Simples, as one Russian-speaking Meerkat might say.
Emma Simon is a freelance consumer journalist and former Personal Finance Editor at The Sunday Telegraph