ComparetheMarket Fined £17.9 Million for Artificially Inflating Insurance Costs
Price comparison site ComparetheMarket has been handed a £17.9 million penalty for falsifying information presented to customers. The service which enables customers to compare the market for mortgages, insurance and other financial products faces accusations of artificially inflating home insurance costs.
The Competition and Markets Authority (CMA) reports that ComparetheMarket unfairly prevented insurers from advertising their products at lower prices elsewhere. This may have subsequently prevented thousands or even millions of consumers accessing the best possible deals on their insurance premiums, by providing them with misleading information.
ComparetheMarket has subsequently responded, stating that the company “fundamentally” disagrees with the ruling and maintains its innocence.
“We fundamentally disagree with the conclusions the CMA has drawn and will be carefully examining the detailed rationale behind the decision and considering all of our options,” read the statement issued by ComparetheMarket.
Limiting Access to Competitive Deals
ComparetheMarket was created for the sole purpose of simplifying the process of comparing offers from as many providers as possible, in order to access the best possible deal, however, the accusations of the CMA suggest that those who used the service to compare the market for insurance quotes may have been deliberately denied access to the most competitive offers.
“Price comparison websites are excellent for consumers. They promote competition between providers, offer choice for customers, and make it easier for consumers to find the best bargains,” commented Michael Grenfell, speaking on behalf of the Competition and Markets Authority.
“It is therefore unacceptable that ComparetheMarket, which has been the largest price comparison site for home insurance for several years, used clauses in its contracts that restricted home insurers from offering bigger discounts on competing websites, so limiting the bargains potentially available to consumers.”
Furthermore, the published findings of the CMA included the following conclusions:
- The insurers bound by the contracts were prohibited from offering cheaper deals on other price comparison websites
- Rival comparison sites could not offer lower prices, for example, by lowering their commission fees to encourage insurers to quote lower prices on their platforms
- Without the clauses, ComparetheMarket itself would have had to compete harder to get lower prices from the home insurers
In an interview with BBC Radio 4, Mr Grenfell accused ComparetheMarket of ‘anti-competitive’ activities that ultimately stood to both harm the competition and prevent customers from accessing the best possible deals on their insurance products.
“We show that it had real anti-competitive effects, that there were cases where insurance companies wanted to offer promotions or discounts on other websites, and they were prevented from doing so as a result of the clauses,” Mr Grenfell told the BBC.
The investigation into ComparetheMarket’s anti-competitive behavior was conducted over the course of three years. The company has since indicated its intent to challenge the ruling.
If looking to get the best possible deal on a loan, mortgage or financial product of any kind, compare the market in its entirety with the help of UK Property Finance.