Insurance comparison sites have cleaned up their act, says FSA

The FSA has asked privacy regulator the Information Commissioner's Office (ICO), though, to investigate whether companies should tell users when their data will be sold to third parties.

The Financial Services Authority (FSA) found in May that insurance aggregator, or price comparison, websites were providing quotes improperly, without allowing consumers to change or even see the assumptions made about them to generate policy prices.

The FSA has now conducted a follow up review of some of the 17 sites covered by its initial investigation and found significant improvements.

"Many sites have made significant improvements and are consistently providing clear, fair and not misleading information," said the FSA in a statement. "The vast majority of firms have clear, fair and not misleading adverts."

The FSA still has concerns, though, about the degree to which aggregators allow consumers to make informed decisions about a complex product such as insurance.

"The FSA has identified two specific areas where some firms need to make further improvements," the regulator said. "[These are:] obtaining better information from insurers about the level of excesses that apply to insurance policies; and making more clear the assumptions about consumers' needs and circumstances that some websites use to obtain quotes."

The FSA's investigation found that some companies are not showing what of the quoted excess is compulsory and what is voluntary. Where this is because the aggregator was not provided with the information, that is not made clear to the consumer.

It also found that there were problems about the assumptions made by insurers and aggregators.

"Insurance aggregators make assumptions to generate quotes quickly," the FSA's report said. "In the area of motor insurance, examples of such assumptions in relation to the main driver and/or the vehicle are that the applicant is the main driver of the car and not a professional driver; that the applicant has been driving regularly since the date that his licence was issued, or that the vehicle is not a van or commercial vehicle and is not used for hire, trade or delivery."

"Where assumptions were made, they were not always set out clearly," it said. "For example, some firms were hiding away assumptions within the 'small print' of the firm's 'Terms and Conditions'. We expect firms to make sure that any assumptions are clearly and prominently signposted on their websites and at all relevant stages of the customer's online 'journey'."

The FSA also looked at firms' advertising and found that it, too, was largely fair and clear and did not mislead consumers.

The FSA welcomed the improvements that have been made in the past six months.

“We are pleased that firms have made improvements in the information they provide," said Dan Waters, the FSA's director of retail policy and conduct risk. "But it is imperative that all comparison websites provide clear information so that consumers can make informed decisions. We have contacted all websites involved in our review, to set out our findings and the standards we expect. Where needed, we are requiring firms to take prompt action to address our remaining concerns."

The FSA said that it had asked the ICO to investigate whether or not aggregators must tell customers that their data will be sold to third parties. It said that the issue was raised in its investigations, but that it lay within the ICO's remit.