Price comparison websites (PCWs) provide a “mostly positive consumer experience”, according to the Competition and Markets Authority (CMA), and “should result in lower prices and better choices” for consumers. Companies in the sector breathed an almost tangible sigh of relief at the report, which comes after a year of scrutiny into everything from consumer trust and accuracy of results, to quality ratings and complaints handing.
Listed site Moneysupermarket.com (MONY) welcomed the acknowledgement that PCWs “are a force for good, making it easier for consumers to shop around”. GoCompare.com (GOCO) said that the “level of consumer satisfaction is no surprise”.
These companies have every right to be a little smug. The review – which was commissioned in 2016 to address concerns that PCWs discourage healthy competition – largely contained glowing praise. Around eight in 10 customers said using the sites meant they had, or would have, made a better choice of household services, while only 3 per cent had made a complaint. And although only a small proportion of the people questioned thought that all household service providers are represented on PCWs, over 80 per cent were confident that the comparison results matched their needs.
More importantly, consumers in the survey did not think that the sites were pushing any particular supplier, allaying the CMA’s concerns that the market is anti-competitive. That said, the watchdog did recommend the use of more than one comparison website to ensure the best deal.
But not all PCWs emerged from the inspection unscathed. Following the culmination of the review, the CMA has launched an enquiry into Comparethemarket.com, which has the largest share of the PCW market. The meerkat-marketed site has irked regulators by imposing “most favoured nation” clauses on certain insurers, which prevent them from offering cheaper deals elsewhere.
The CMA argued that these deals could allow the site to use its dominant market position to offer much more attractive comparisons than others, thus reducing the level of competition among PCWs. This could, the watchdog cautioned, “result in higher home insurance prices”.
Comparethemarket’s owner, BGL, argues that these “simple contractual arrangements” ensure that “our customers always get the lowest available price”. The company, which had been planning a London IPO, said it “welcomes the opportunity to discuss this further with the CMA”.
