Do Price Comparison Sites Really Work?
As the internet has evolved our online shopping prowess has become savvier and most of us are able to locate the exact products and services we are looking for in a relatively short space of time through the most popular search engines.
Searching for the best price is so much quicker and easier and often online purchases can be cheaper than buying on the high street. Seven years ago the first price comparison websites appeared. Their aim is to gather information from a large number of businesses offering the same or similar product, such as credit cards or car insurance, and display the details in order of relevancy, or price, according to the details requested. The idea is to give the consumer a fast and efficient comparison between like-for-like products to save them having to spend time searching across different supplier sites themselves.
Most price comparison sites are independent as they are not owned by any provider of financial products. Others, however, are provided by a supplier of the product and allow other providers to promote their products on their site, which is a form of advertising and therefore may not be a true representation of consumer choice. Therefore some price comparison sites search a restricted number of providers. There will be some providers who never feature on these sites, so there is always the possibility that there might be a potentially better deal to be had by searching yourself. Any two sites will probably search a different set of providers so it would make sense to consult two or even three sites to get the best deal. You might also find that the cheapest quote differs between several of the bigger sites so consulting with several will give you a true indicator of the best deal. In some circumstances a cheaper deal may be found by dealing direct with a provider.
Price comparison sites have been criticised both for confusing information and for a lack of detail that is necessary for people to make informed choices. For this reason they are generally best suited where the customer has already identified the exact product he wants. For example, a comparison site may be able to give you the best three-year fixed rate mortgage but it won't tell give you advice on whether this is best for your circumstances or give you other mortgage options that only a qualified financial adviser could tell you. The British Insurance Brokers Association (BIBA) commissioned independent research which revealed that 84% found the comparisons confusing. With so many price comparison sites on the internet and many being outside of the UK, regulation may be impossible. The Financial Services Authority has investigated insurance price comparison websites since not all provide users with clear information, and calls for a voluntary code of conduct have received positive support within the industry.
The providers featured on a comparison site are not always registered in the UK, so the onus is on the customer to check out the credentials of a provider before accepting a deal. Savings accounts and ISAs could be at risk from being uninsured if they are not regulated by the UK when things go wrong which will result in the customer being refused compensation. In the current climate, it might pay to be prudent and do some proper research first.
Several of the top price comparison sites give the customer the option of applying for several products within minutes of each other if they so desire. It's worth noting that where the customer is applying for a credit card, or a loan of any description, they are highly likely to have their credit rating checked at the same time. Where several applications have been submitted by the same person in the same day, these multiple credit checks can risk jeopardising your credit rating regardless of whether you are turned down or not.
Something to be aware of when using price comparison sites is that, in some instances, the price you are quoted may not really be the best deal you can get when all the factors are taken into account and, more importantly, the price quoted may not be accurate either. For example, it is estimated that roughly a mere 10% of quotes generated in life insurance comparisons are a true reflection of the price you will finally pay, because the initial quote does not take into account any health issues etc. Once you have entered your personal details and history the price is adjusted accordingly.