The Competition and Markets Authority (CMA) has suggested it will implement a “clean bill of health” to the comparison site market in September, following the update of an investigation launched last year.
According to the update released last week, this could involve legal action and changes to regulation in a bid to expel consumer scepticism and anti-competitive practices thought to be prevalent in the market, which includes well-known sites such as Moneysupermarket.com and uSwitch.
The launch of the examination in September into what the watchdog terms “Digital Comparison Tools” (or “DCTs”) – which compile lists of products and services to inform consumer purchasing on products and services like utilities, travel and broadband – came as a surprise to the industry, and was prompted by concerns among suppliers and consumers.
For DCTs, the investigation’s midway update appeared innocuous; a press release issued by the CMA on March 27 quoted group’s acting chief executive, Andrea Coscelli, as saying; “Our work so far suggests that digital tools like price comparison websites generally work well for consumers, who really value the service they provide.”
However, the update also stated that “improvements may be necessary” in regard to four particular areas of concern, broadly covering DCTs’ transparency of the markets they’re covering, the information that suppliers provide, the limiting of competition, and how these sites are regulated.
The CMA also claims to be taking into account the potential impact of advancements such as AI and voice activation, among other developments, and their implications on consumer switching and trust.
In regards to consumer confidence, the CMA has said it’s considering the options of “enforcement action” if consumers are deemed to be being misled, and how regulation can be used to improve confidence, such as reducing data use “without unduly constraining DCTs’ abilities to deliver benefits”.
The group will also look at ways to maximise DCTs’ effectiveness by considering the circumstances – “if any” – in which these sites could benefit from greater access to data in order to provide a better service, but claimed it will likely attempt to “resolve competition issues” by means of law enforcement, among other steps.
Lastly, the CMA has stated plans to “refine regulation”; “We are considering the possibility of a set of cross-sector principles for DCTs. This could include the content of any such principles and the various possible measures to ensure compliance, from self-regulation to certification to full regulation.”
“Clean bill of health”
Come September, the CMA has said it is likely to use its power to tackle these areas and give the market “a clean bill of health” using a combination of competition and consumer enforcement legal action, regulatory and government recommendations and working with firms in the sector on self-regulation.
If that sounds heavy-handed, it’s as yet unclear just how drastic or restricting the CMA’s action will be to these sites, with its reported findings so far showing a spread of high consumer confidence mixed with some degree of scepticism.
Overall, the investigation has so far found that consumers generally consider DCTs to work well by simplifying and informing purchases, and saving them money; in the past year, 84% of people looking for car insurance used a comparison site (67% for energy and 52% for broadband), while 90% reported being satisfied with the service they received.
On the other hand, the CMA has found that the sweeping majority (89%) believe that DCTs aren’t featuring all suppliers in each market, while quotes from undisclosed suppliers – including an airline, utility provider and insurance company – accuse DCTs of “misleading consumers”.
Among accusations admin fees going undisclosed and other logistical concerns, examples cited by a disgruntled airline included a comparison site running paid search ads conveying the appearance of officially-linked websites.