Price Comparison Websites, E-Commerce Video Lecture | E-Commerce - B Com

so at the back end of 2013 and the FCA
started an investigation into price
comparison websites they involves 14
price comparison websites in this study
and those 14 were chosen because
combined they were responsible for
ninety-five percent of the insurance
policy sales that had gone through that
channel so you can bet your bottom
dollar that all of the big comparison
sites that you know we can see the theme
tune for would probably be included in
that investigation now the industry had
been making a lot of noise about price
comparison websites so some people were
surprised that it did actually take the
FCA so long to to get around to
investigating them but they did and some
of the findings in that report are
really interesting and if if any of the
people in this room if you come across
customers who say oh I just go online
I'll get a cheaper online and that old
line that we hear quite a lot there's
some stuff in this report that you might
find quite useful just to try and read
but some of those things you hear from
your clients
now the main criticism of the SCA from
the FCA of the price comparison websites
if I could put it into a broad under a
broad umbrella it was mostly about the
fact that they don't present information
in a way that helps customers make clear
decisions they found that a lot of the
time the information was presented in a
way which would mislead customers or in
some instances they have skewered
certain information one of the simple
examples that was highlighted in the
report is on many of the websites when
customers clink clicked on an IE button
for more information often there would
be a pop-up that says check your policy
document or check with the insurer now
that's obviously no use if you go in
through a data capture stage to get a
quote and it's telling you to check
policy document because of course you
haven't got one by that stage so that's
how useful that kind of thing is
so the key things that the FCA found
price comparison websites fallen short
in were the main features of the product
including the cover levels and the
excess the main exclusions and
limitations of the policy and the cost
of any additional fees I'm not sure
about you and I think these are pretty
important to give the pieces of
information to be getting wrong
one of the tricks that many of the price
comparison websites use around voluntary
access is effectively they ignore it so
when you're a customer and you're asked
to choose the voluntary access when
you're going through the data capture
stages I think it's reasonable to assume
that the quotes that come up in the
results stage would be quotes that
include the amount of voluntary access
that you've chosen that's simply not the
case on many of these sites there were
instances where you know clients would
put in a voluntary excess of 150 pound
but the cheapest quotes came up but they
had an access of 750 pounds a thousand
pounds stuff that bore no resemblance to
the information that they they requested
and on a lot of these websites because
of the way they present the information
they don't highlight that the excess is
different so if you're just the type of
customer that just clicks through
thinking what of course this has got to
be right you might be in for a nasty
surprise when it comes to a claim and
you find out instead of 150 pound access
you've got a thousand pound access quite
a difference there one of the other
things around voluntary access which was
quite worrying was the FCA highlighted
the way that certain websites display
certain information about stuff like
voluntary access also doesn't help the
clients voluntary access is quite a
jargony thing if you're not used to
dealing with insurance and the FCA found
in the consumer study group that they
use that many of the consumers because
of the way that the term voluntary
access was presented many consumers
thought that it was actually the amount
that the insurer would give them back in
the event of a claim one of the other
things that the price comparison
websites got wrong was the use of red
crosses and green ticks now as you'd
imagine a green tick would normally
indicate that a feature or a benefit is
included in the policy a red cross would
indicate that it's not the FCA found
that many of the price comparison
websites were using these incorrectly
and there were many occasions that they
found where there was a green tick on
the results screen indicating that lets
say extended accidental damage
was included in the policy but when you
click through to the insurer site or
click through to buy the policy it
actually wasn't included or it was
available but for an extra premium which
means by the time you get to actually
part with your money the premium is very
different from the premium that the you
ver click through to try and buy so
overall the SCA found that the way that
this information was presented was
likely to lead to a lot of customer
confusion and I wouldn't mind betting
that there's already quite a lot of
customers who found themselves stung by
purchasing a policy this may be not
appropriate for their needs or they've
had a claim and they've ended up pain a
much much higher access than they
anticipated and I suspect that those
clients are desperate to go back to a
broker where they know they could be
taken care of where they know that what
they want is going to be taken into
account in the policy that they provided
with so some of the things that came out
of the price comparison website study
which i thought would be interesting for
you to know and again it follows a theme
around obscure and information or not
making information clear so one of the
things the FDA found is that the role of
price comparison websites wasn't made
clear to consumers so many consumers
thought that the results would be
tailored towards their needs and their
preferences and as we've already seen
with the example using them voluntary
accesses that's plainly not the case
they will tend to look at the property
and throw up the cheapest results from
that and almost disregard some of the
customers preferences one of the other
things was they found that the way that
price comparisons websites were
remunerated was not made clear to
clients so many of them used to use
phrases like it's free to use our
service or it costs you nothing to use
our service and again that's not true in
a capitalist society we know that
nothing's free we know that the consumer
pays for it somewhere and the comparison
websites tends to obscure how the
clients paid for it
and the third thing that was actually
the most worrying for most of the
consumers in the consumer group was that
most of the price comparison websites
tended to make it difficult to find out
about their ownership structures and
that is you know it's quite interesting
to note that most of the price
comparison websites are actually owned
by insurers or by broker groups which
include insurers now the reason why this
was a concern for people in the consumer
groups was because they thought that
that might bias the results that came
out and clearly you know if a price
comparison website is owned by an
insurer you might expect that a policy
that sounded a written by that insurer
to come cheapest most of the time so for
example would your clients know that go
compare was fifty percent owned by ish
or limited or that confused calm was
wholly owned by Admiral or that compare
the market was owned by budget insurance
who owned a whole host of different
brands so again if you make your clients
aware of this they may not think that
the price comparison websites are these
independent knights in shining armor and
that some people think they are
one of the other areas that the FCA
criticised the price comparison websites
for was in the use of due diligence so
many of the price comparison websites
didn't carry out any due diligence on
the insurers on their panel at all and
those that did often only carried it out
when they first join the panel so if you
can imagine a situation if you're not if
you're not carrying out due diligence on
your insurers that are on your panel how
do you know they're still trading how do
you know they're still active is it
possible that you'd be selling insurance
policies when an issuer of the stock
trading is quite likely if you're not
carrying out regular due diligence this
bit wasn't in the SE a study but while
we're talking about price comparison
websites I thought it would be useful to
include because normally when we've been
presenting these around the country is
always been one broker in the room who's
been affected by this in the small print
you need to dig quite deep to find it on
most of the comparison websites so these
are just taken from the big for all of
them say that some of our product and
service providers will carry out a
credit reference search in order to
provide you with a quote now bear in
mind it says product and service
providers not they the website now what
that means is when you go on to a price
comparison website to get general
insurance quote if you get 30 quot
results that could mean 30 credit
reference searches because each one of
those insurers and certain and service
providers do it a quote now as I say
there's always been one broker in the
room at least one broker in the room
where we'd be presenting this around the
country so I'll just give you a couple
of examples as well just give you a
couple of examples I've heard and then
perhaps you could share your example as
well so one broker was a completion
stage the lender was just doing the
final pre-completion checks and this
lender in particular did another credit
reference search just before releasing
the money the client failed the credit
reference search and a lender withdrew
the offer when the broker went back to
the client find out why it failed credit
reference search turns out the client
had something like 70 credit record
searches that had been done in his name
just over over one weekend so the lender
thought that the client is credit hungry
now these are soft credit searches for
those that want to know but it's a myth
that soft credit searches don't affect
your credit score because different
lenders approach credit reference
searches in different ways there are
some lenders that I've been told that
definitely do take soft credit reference
searches into account particularly if is
a large number
as I said earlier I think the tide is
turning there's been quite a few stories
in the news over this last 12 months if
you if you look for them it just tends
to show you how hard it's getting for
the price comparison websites they can't
run riot anymore as they used to so the
most favored nation clause now this was
a clause that many comparison websites
used to use when they first came out to
say you won't find our insurance any
cheaper anywhere else now contractually
that was true because what a most
favored nation clause was was it
contractually obliged clients to offer
sorry insurers not to be able to offer
the same quote through that channel any
cheaper anywhere else so they were found
to be anti-competitive so they were
banned in the middle of last year tesco
compared so Tesco in 2014 one of the
biggest retail brands in the UK they
launched their comparison site with much
fanfare and then quietly closed it on
the twenty-ninth of august i think 2014
because they couldn't make it work and
beat that quote owned by google one of
the biggest retail brands in the world
obviously they control a lot of search
engine traffic you'd expect beat that
quote to come up fairly close to the top
when anybody puts you know home
insurance comparison or something like
that into the search engine but in their
first year of trading 9.4 million loss
so Google are struggling to make that
model work for them as well
now with all of these findings coming
out of the FCA report and some of the
examples we've seen about credit score
at Suffolk it's surprising that not more
has been made of this in the media so I
think you know it's it's clear that you
know you need to talk to your clients
about it because otherwise they probably
won't find out about this and in order
to help you out there's some handouts at
the front which is effectively a summary
of this presentation please feel free to
either come and see me or come and help
yourself after this is finished and also
I've got a client facing version of that
document that I prepared if any of you
communicate with your clients via email
or newsletters or anything like that and
you would find that useful to have and
please come and see me afterwards and
i'll email out to you when i get back to
the office and you can copy and paste
and do what you like with that
this was in the news when I was reading
the Sunday papers a couple of months ago
so as I said shortly after they were
asked to take the home insurance
comparison advert off off the a lot of
them jumped into promoting their energy
switching services now I believe a
question about this was raised in the
houses of parliament shortly after this
story broke as well but comparison sites
have been accused of not always showing
the cheapest deal available to clients
when they go on to switch their energy
now what relevance does that got to me I
hear you ask well this is just again
it's another example of where price
comparison websites are not these white
knights these kind of saviors of
consumers that they're always cracked
out to be there they're in it to make a
profit like anyone else and I think
these kinds of stories they do just put
pressure on that market and if your
client is thinking you know or maybe I
should go online because I'm sure
they'll treat me well these are the
kinds of stories that are out there that
you know that this is not kind of
anything confidential this was in one of
the major sunday newspapers a couple of
months ago you can use this information
to persuade your clients that actually
you're a safe pair of hands for their GI
and a price comparison website