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20 May 2013
The Australian Securities and Investments Commission (ASIC) is threatening insurance and credit comparison websites with regulatory action if they fail to comply with consumer laws.
It is the second time in recent weeks the regulator has singled out aggregators, after last month’s warning on comparison advertisements featuring products with insufficiently similar attributes and opaque awards or product ratings.
ASIC will target sites that provide inaccurate information or mislead consumers.
Commissioner Peter Kell says he is concerned about failure to disclose which insurers are being compared for quotes, how rankings are compiled and the use of special offers and “featured products”.
He also fears aggregators are failing to disclose links to insurers they compare. Many, including the Auto & General-owned Captain Compare, offer insurance products from their parent companies.
“ASIC recognises that consumers can benefit from the increasing opportunities to research and compare financial products online,” he said.
“For this to occur, operators of comparison websites must take care to ensure they accurately portray the features and limitations of the products compared.
“We will be targeting this area of the market and will take regulatory action where necessary to ensure operators of financial product comparison websites comply with the law.”
While aggregators account for about half of all insurance products sold in the UK, in Australia the big insurers have stalled their progress by refusing to take part.
ASIC has been examining comparator sites since November last year, and major insurers have raised concerns over the quality and accuracy of data on the sites, which they say fails to recognise product features other than price.
Suncorp and IAG have both issued legal threats against price comparison websites for publishing their premium information without permission.
General insurance comparison platforms came under the scrutiny of the Australian Prudential Regulation Authority in November last year, when it warned the UK experience showed comparators’ success was linked to falling underwriter profits in soft market conditions.
“By its very nature, insurance pricing involves an element of uncertainty,” the regulator said at the time.
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