A review of 14 price comparison sites by industry regulator the Financial Conduct Authority, has offered some worrying opinion.
According to the FCA, consumers are not being given the correct information to help them make decisions, with a number of sites in direct contravention of regulations.
“This is something that we have been trying to explain to our clients for some time” says Simon Butler, senior mortgage and protection consultant at specialist broker Contractor Mortgages Made Easy.
“We speak with people very frequently who believe that the products that they see have been ‘offered’ to them by the providers of said policies, but that simply is not the case. Many clients get a nasty surprise when looking at the actual offer of cover once underwriting has been concluded.”
Several comparison sites are failing to disclose potential conflicts’ of interest, by not informing potential customers of their ownership structures. Confused.com is owned, for example, by Admiral Insurance. Likewise Gocompare.com, owned by insurer Esure.
“It’s easy for consumers to be confused by insurance in general, of that there is no doubt, it’s a minefield of jargon; but to fail to disclose that there could well be a deeper meaning to the ‘recommendations’ that these sites make to you, is plain wrong and very worrying” says Simon.
The world of insurance is rarely an easy one to understand, and comparison sites say that they help consumers to choose the best cover for them. The obvious problem with this approach however, is that products on sites such as Go Compare, or Confused.com are ranked solely by price – omitting vital details such as the scope of cover, a potentially catastrophic problem should anyone have to claim.
“Unfortunately people tend to group life or health insurance, or income protection, in with car insurance, but that is a very, very risky approach” adds Butler, a consultant with eight years’ experience in advising on protection strategies.
“Price is actually a relatively small part of my recommendation, as the primary concern needs to be that the cover is correct. How good value, for example, would a policy be that never paid out should the need to claim arise? By definition, a time when you require the help of such a policy is not a good time emotionally, so to receive the news that you are not going to get what you think can be devastating.”
“The correct approach is to consider protection needs in the same way as a mortgage. It simply isn’t a one size fits all field of products, and ‘you get what you pay for’ is probably far closer, albeit still slightly naïve. By speaking with a specialist consultant you can ensure that any provisions that you put in place are correct for you, and that should you ever have to claim on them, you will not be caught short.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
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