How to get the most out of price comparison websites
By Kate Saines
If you have recently bought insurance, needed help investing your ISA allowance, considered remortgaging your house or attempted to switch energy companies it's highly likely you did so using a price comparison website.
You might also have used one of these sites to compare savings bonds, to look for business loan rates or to find the best personal pension plan.
In fact the range of products available for comparison on these websites is vast and growing all the time.
As a result, you can also find holidays, vouchers for days out, shopping and restaurant options as well as an array of other products when you log on.
It's a wonder we ever survived without them. After all, in just a few keystrokes and clicks of a mouse we can summon up a list of comparable products, at the best prices to suit our specific needs.
But how can we be entirely confident we are getting a good deal when using price comparison websites?
Recently the Financial Services Authority (FSA) wrote to the firms running the price comparison websites warning them of their responsibility to treat customers fairly.
This crackdown came after an investigation by the FSA over concerns that websites offering general insurance may have been unintentionally providing advice they were not authorised to give.
The FSA said it was unclear in some cases whether the websites were introducing customers to insurance, arranging it or advising them on buying insurance.
As a result price comparison websites are being asked to clarify their position on this.
Meanwhile, the FSA also highlighted there was confusion over which firm to complain to in the case of problems.
Now the firms have been issued with proposed guidance, which it is hoped will limit the chances of customers selecting unsuitable products.
Graeme Trudgill, head of corporate affairs for the British Insurance Brokers' Association (Biba), said: "For the FSA to say comparison websites are falling short of their regulatory requirements is of great concern and we strongly believe these recommendations must be implemented by the sites without delay."
One concern Biba said it shared strongly with the FSA was the fact that many questions on these sites were pre-populated with default answers.
Steve White, head of compliance and training at Biba, described the issuing of guidelines, which the price comparison websites have until August to respond to, as an "important step in consumer protection".
He said it should lead to greater clarity in terms of who customers are dealing with and the policy they are purchasing.
But while the FSA can go so far in protecting the consumer, we can also increase our chances of finding the best products on price comparison websites and limit the risk of finding the worst by using them sensibly.
There are certain factors you should consider before using a price comparison site.
Use several websites
Most of the websites, although carrying a wide choice of comparisons, don't cover the entire market.
And often the products which are shown may only be there because the price comparison website has a deal with the company providing them.
A spokeswoman for the Money Advice Service said: "Comparison websites often cover a wide range of products, and you can usually tailor the information to your needs.
"But there are things you should think about when using these sites."
"Does the table show all of the products on the market or just a selection? Some may only include products that the website can make money from in some way for example if you click through to the provider."
The only way to ensure you are getting a broad outlook is to visit several price comparison websites and compare the entire range of products.
And don't forget, there are other ways to 'shop around'. Brokers, trade bodies, newspapers and plenty of other resources are available for you to conduct your search. There's more on this later.
Make sure there is enough information
One of the most important questions you should ask yourself when assessing a table of products provided by one of these websites is whether there is enough information provided for you to make a decision.
A classic example of this is, when buying insurance, the quoted prices on the table provided might only be for a company's 'basic' policy.
This is great if you only need a very basic form of cover. But say, for example, it's essential your home insurance policy has legal cover you may find these policies will require you to upgrade to a more expensive product to benefit.
Often, information such as this will not be included in a table.
The Money Advice Service said you should always ask yourself whether the information includes details that are important to you, or do you need to gather more detail?
Its spokeswoman said: "Is the information personalised for your needs? It may be an illustration rather than an individual quote.
"If it is a quote, is it guaranteed by the comparison website?"
You should also check how up to date information is. Details should always be checked with the product provider or an adviser before you buy, says the Money Advice Service.
Make sure you are eligible for certain products
It's important to remember that price comparison websites can only garner a certain amount of detail about customers.
As a result, when you actually come to apply for the product, you might be turned down.
As mentioned, sometimes tables can only include illustrations. On a credit card comparison table, for example, you might be impressed by an incredibly low interest rate.
Upon application however, that rate may not apply to you as these rates tend only to be 'representative'. Anyone with even a slight blemish on their credit rating will find the rate is higher.
Don't necessarily opt for the product listed first
Watch out – many companies may have paid to have their product listed higher up a table. So while you might think 'product number one' on your list is the best for you, this is not always the case.
Likewise other companies might have paid for their product to appear bigger, brighter or in a colourful splash designed to make it stand out.
Again this does not mean this has been selected as your ideal product.
Remember, price comparison websites often make money by setting up links which take customers straight through to a company's website. These are the ones that will probably be highlighted not the ones handpicked for you.
As we mentioned earlier, going to several price comparison websites to get quotes will stop you falling for this.
Make sure you assess all the options on all the tables. And if there are any crossovers which appeal to you, and include all the features you are looking for, then you may just have struck gold.
If you are looking for complete impartiality
If you are concerned the price comparison websites you are using are not completely neutral, as well as using others, there are other resources at your disposal.
The Money Advice Service has impartial tables on financial products such as mortgages, savings accounts, pensions and annuities.
It advises, when 'shopping around' you also tap into other resources. Newspaper finance sections, specialist magazines and TV programmes can often provide information in the form of product reviews and analysis of markets.
Meanwhile check out company brochures, adverts and speak to brokers or even trade bodies.
The key is not to limit your research to one website or source of information.
The Money Advice Service's spokeswoman said: "Whether you're thinking of opening a savings account, taking out a loan, or changing your electricity supplier or mobile phone, it's always a good idea to shop around to find the one that's right for you.
"And with the internet you have even more ways to shop around."
She added, however, that when using best buy tables in newspapers to remember these only show a small number of products and they might not necessarily be relevant to your circumstances."
Meanwhile there are certain organisations helping raise the standards in this area.
Energy consumer champion, Consumer Focus, offers a voluntary code of practice for websites offering online price comparison.
Meanwhile the Association of British Insurers (ABI) has a voluntary good practice guide for insurance comparison sites.
Myfinances.co.uk insurance comparison tools are powered by Confused.com.
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