Government considers regulation of Price Comparison Websites

Government considers regulation of Price Comparison Websites

The Secretary of State for the Department for Business, Energy & Industrial Strategy, Greg Clark MP, has this week written to the Chief Executive of the Competition and Markets Authority (CMA), Dr Andrea Coscelli, in relation to what the Government refer to as ‘digital comparison tools’ (DCTs), otherwise known as price comparison websites (PCWs).

In his letter the Secretary of State refers to the CMA investigation into DCTs carried out in 2016 and 2017. As a part of this investigation the CMA made a recommendation that consideration should be made to the regulation of DCTs to ensure that they operate in the interests of consumers.

Commenting on this, Mr Clark MP said

“… this letter also responds to your earlier work on Digital Comparison Tools (DCTs). These are a growing feature of markets and, as your study found, they make it easier to shop around and improve competition which drives lower prices, higher quality, innovation and efficiency.

“Their evolution has considerable potential to get consumers better deals with even less effort and therefore tackle the loyalty penalty.

“As you identify, it is important we ensure they are trusted, transparent and easy to use.”

He goes on to say:

“… we are considering the earlier recommendations from your Digital Comparison Tools market study.

“This includes, in particular, the suggestion to consider bringing DCTs into regulators’ scope where they are not already and how best to enable services spanning more than one sector.”

Despite the general perception of price comparison websites being on the side of consumers, there has been much written over recent months which calls the transparency and practices of some PCWs into question. Last autumn, for example, the CMA published preliminary findings on their investigation into Compare the Market in relation to their contracts with home insurers, regarding which the CMA said:

“Over 20 million UK households have home insurance and more than 60% of new policies are found on price comparison sites. Therefore it’s crucial that these companies are able to offer customers their best possible deals.

“Our investigation has provisionally found that Compare the Market has broken the law by preventing home insurers from offering lower prices elsewhere. This could result in people paying higher premiums than they need to.”

Our view is that there are reasons as to why consumers should be cautious when using DCTs / PCWs as - as noted by the CMA and others - using such services is not always fully clear, transparent nor in the best interests of the consumer. As such we fully support the Secretary of State’s comments.

We look forward to further updates from the Government and the CMA.