Price comparison sites such as uSwitch and Moneysupermarket are to be investigated by the Competition and Markets Authority (CMA).
The watchdog announced an examination into “DCTs” (digital comparison tools) which compile lists of products and services with the aim of helping their users make the right choice on expenses like broadband, energy and phone tariffs.
The news comes completely out of the blue, and just a few months after it ruled that comparison sites can customise what they display to the user, potentially to only show items they make commission on.
To be trusted?
An announcement from the group - which you can find here - appears harmless on the face of things. Making up the four points of examination are a look into “what consumers expect” from comparison sites, their impact on competition between suppliers, how sites compete with each other, and the effectiveness of regulation.
It’s in the quotes from Andrea Coscelli, acting chief executive of the CMA, where things get interesting, though. Starting with an acknowledgement of them injecting competition into “a number of markets”, they tail off into a hint regarding a purported lack of transparency by some sites in regards to their business model.
“Some people have also raised concerns about certain issues, including whether consumers can trust the information that’s available, and the study will look at these issues too.”
The statement makes clear that via the production of ideas to maximise the benefits for users, the group will see whether they “would benefit from being made more aware of how DCTs earn money” and the impact on the services they help sell.
Sector by sector
Sector analysis is another big focus for the report, which is open to feedback up until October 24.
The CMA wants to gain a feel for how different sectors have leveraged the sites for their own benefit. Through a look into practices across broadband, home insurance, credit cards and flights the group believes it will be able to build a picture of why they have been more successful in some markets than others.
Luke Watson, GB Energy managing director, has already claimed the CMA to have “no idea” about comparison sites, which in comments made to the BBC he labelled “consumer champions”.
Given its close ties to affiliate marketing, PerformanceIN will be calling on its own experts to deliver reaction to the story next week.