The Financial Conduct Authority (FCA) has sent a ‘Dear CEO’ letter to Price Comparison Websites. The letter identifies the key risks of harm which it believes Price Comparison Websites (PCWs) pose to their customers and the markets in which they operate. PCWs are expected to review the harms identified and take steps to reduce the risk of these harms occurring.
Included in the portfolio of PCWs are both firms that conduct comparisons on their own websites and firms that outsource their comparison service to other businesses. The letter expresses concern that PCWs do not always understand their regulatory obligations and do not implement regulatory changes as required. The FCA expects firms to work with other members of the insurance distribution chain to ensure that products sold on websites are appropriate for the target market and do not lead to harm. The FCA expects firms to consider how new market developments, such as the use of new technology to deliver services, may pose harm to customers.
The FCA has identified five key harms relating to PCWs:
- consumers being sold unsuitable products
- consumers unable to access services and being appropriately sign-posted to alternative providers
- ineffective governance arrangements and poor firm culture
- poor operational controls
- poorly managed innovation
The letter also mentions covid-19 resilience, Brexit and the impact of the FCA’s final report on pricing practices.