Feeds

Meerkats face financial regulation

Price comparison sites may be breaking financial advice regulations, says FSA

Build a business case: developing custom apps

Price comparison sites may be in breach of financial advice regulations when they lead customers to insurance policies, regulator the Financial Services Authority (FSA) has said.

Companies must have FSA permission to provide financial advice, but some price comparison website activity could amount to a regulated activity, it has warned.

The FSA has written to operators which direct web users to home and car insurance providers after a review found some websites were leading customers to inappropriate insurance deals.

Websites must make sure that they comply with their legal responsibilities and should not offer financial advice to customers unless they have permission to do so, the regulator warned.

"Consumers may be being misled about the services they are receiving from price comparison sites," the FSA said in its letter to price comparison website operators (11-page, 230 KB PDF).

It warned that in some cases this could lead to people being "unable to claim benefits through a lack of opportunity to disclose all material facts".

Websites should consider whether they are introducing, arranging or advising customers on purchasing an insurance contract, and whether they have the correct permission for that role, the FSA warned.

Websites should be careful not to inadvertently promote particular firms through the prominent use of names or logos on generic pages, and should also avoid 'pick of the best' products or star ratings unless intending to give advice, the letter said.

"Advising might include suggesting the purchase of specific contracts of insurance because they meet investors' requirements," the FSA warned.

The letter reminded price comparison websites of their responsibility to check customer eligibility or that all the relevant information had been disclosed before making a recommendation. The FSA found that many of the companies it interviewed between June and September 2010 thought the onus was on the customer to provide sufficient information.

Terms and conditions of insurance policies are often too complicated to expect customers to disclose all the relevant information to the insurer, and to ensure that they have bought an appropriate policy, the regulator warned.

Websites also have a duty to make it clear to customers which firm they are actually dealing with, and who they should be making any complaints to, the FSA said. This is particularly important in the case of 'white labelled' sites, which use another company's comparison tools to provide search results.

The FSA's letter follows a review of 19 price comparison websites by the regulator, including market leaders MoneySupermarket, CompareTheMarket, Confused and GoCompare.

The FSA found "failures to comply with our rules which could result in consumers not being treated fairly," the letter said.

Price comparison companies have until 8 August to respond to the regulator's letter.

Technology law news is also available from Bootlaw, a free resource for technology start-ups, with regular events hosted by Pinsent Masons.

Copyright © 2011, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

5 things you didn’t know about cloud backup

More from The Register

next story
Kate Bush: Don't make me HAVE CONTACT with your iPHONE
Can't face sea of wobbling fondle implements. What happened to lighters, eh?
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Online tat bazaar eBay coughs to YET ANOTHER outage
Web-based flea market struck dumb by size and scale of fail
Amazon takes swipe at PayPal, Square with card reader for mobes
Etailer plans to undercut rivals with low transaction fee offer
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
US regulators OK sale of IBM's x86 server biz to Lenovo
Now all that remains is for gov't offices to ban the boxes
XBOX One will learn to play media from USB and DLNA sources
Hang on? Aren't those file formats you hardly ever see outside torrents?
prev story

Whitepapers

5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.