Should We Trust Price Comparison Websites?

UKMoneyPot notes that Direct Line has recently started an advertising campaign suggesting that consumers should not trust price comparison sites (such as moneysupermarket.com, confused.com etc) and should instead get quotes directly from themselves.

The studies Direct Line conducted highlighted some interesting figures.

Firstly, 35% of people believe comparison sites searched the whole of the market. In fact, it is probably pretty much impossible for one website to compare every deal available for a product, especially when companies such as Direct Line choose, for whatever reason, not to participate. Confused.com does boast an impressive 97% coverage of the motor insurance market, and comparison sites have dramatically reduced the legwork needed to get a quote – you can fill in the gaps by going direct to providers if necessary.

Whilst I don’t believe that provider coverage is a major issue, more worryingly, the study also found that nearly 40% of people believe that the sites are providing a free service (or make money from advertising space) and do not realise that they probably make money from either passing client details onto providers (selling “leads”) or from commission from products sold via them.

I’m not going to knock the price comparison engines for looking to monetize their websites, but there does need to be more transparency about how they make their money. The financial services industry has had plenty of bad press from the misselling of products, often for big commissions. The middlemen who are the source of a large amount of financial business do not want to fall into the same trap.

How can we trust the sites to give us the best deal if we don’t know how they’re getting paid for our information? I think it’s up to the comparison sites to make it clearer to users how their valuable data will be used or sold.

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2 thoughts on “Should We Trust Price Comparison Websites?

  1. It’s fair to say that even though comparison sites can be extremely useful, it still pays to shop around!

    I recently bought car insurance from the cheapest result of the moneysupermarket comparison service. I also tried a trusted local broker that had been cheap in the past but they couldn’t beat the price.

  2. As a price comparison engine we make our revenue from providing qualified leads to retailers. I think this article raises the key point that a price comparison engine is free to use and will save you hours of research time. What ever happens you can quickly understand what a ‘reasonable’ market rate is and this will help you choose which deal to go for whether through the price comparison engine or direct. I think everyone forgets just how hard it was to source good deals before these services were available.

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