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The revelation that Confused.com’s advice to consumers looking for savings accounts favoured companies that pay it commission could put the regulatory spotlight on the growing number of businesses offering financial advice and services.
A Channel 4 Dispatches investigation has revealed that the comparison website did not research the entire market, as it claimed, but only nine accounts from companies that pay it commission. The investigation looked at comparison sites Gocompare.com, MoneySuperMarket.com, Compare the Market and Confused.com.
Following the revelation, Confused.com was forced to remove its savings-focused site and told Channel 4: “We recognise our savings comparison solution didn’t meet our high standards and we’ve taken the decision to suspend our offering as we look for ways to make improvements.”
Finance regulators regularly fine banks if they mislead consumers with their promotions and it looks only a matter of time that comparison sites will fall within the remit of the UK consumer financial services regulator the Prudential Regulation Authority.
One source in the banking sector said he thought it was common knowledge that comparison sites promote companies that pay them commission. “But if Confused.com has claimed it has looked at the whole market, this is very misleading,” he said. “This will force regulators to look at these sites, but I am not sure if it is the financial services regulator or advertising regulator.”
The financial services sector is being shaken up by new entrants. There are new banks offering traditional banking products such as current and savings accounts, which are covered by the finance regulators, as well as a plethora of companies offering finance services such as peer-to-peer lending and financial advice, including comparison websites.
These are seen as an important part of the finance sector, even more so as the government attempts to increase consumer choice.
In March 2015, the government announced that Gocompare.com would launch its personal current account comparison tool. “This will enable customers, for the first time, to identify which personal current account could suit them best and help to drive switching in the current account market,” the government said in its Budget 2015 announcement.
In 2013, the Payments Council introduced the Current Account Switch Service, which made it possible for consumers to switch accounts in seven days rather than the 30 it took before. This was designed to ensure banks are offering more competitive deals.