ASIC has warned operators of insurance and credit comparison websites of the need to ensure they comply with their obligations under consumer protection laws.
The regular has said in light of the growth in comparison websites, ASIC said it is focused on ensuring these sites are providing accurate information and not providing misleading or inaccurate information that can steer consumers towards unsuitable or more expensive products.
ASIC has already identified a number of concerns with some comparison websites, including that some of the websites:
- only compare a limited number of brands/products from a limited number of providers. This may not be clearly disclosed which creates the impression that the extent of comparison is much broader than it actually is
- use ‘ratings’ and ‘rankings’ for products without a clear explanation of the basis for those ratings and rankings
- refer to ‘special offers’ and ‘featured products’ without properly explaining the basis of selection of certain products.
ASIC’s focus on insurance specific comparison websites found that on some websites:
- there was insufficient disclosure relating to website operators who were related to the issuer of the insurance brands being compared
- comparisons were provided on the basis of price without any warning that different products may have different features and levels of coverage, and
- the operators of websites are not appropriately licensed or authorised to provide financial services.
ASIC also reminded operators that websites that allow consumers to obtain and/or compare insurance quotes will generally be providing financial services. If so, these operators need to be licensed or be an authorised representative of a licensee.
“ASIC recognises that consumers can benefit from the increasing opportunities to research and compare financial products online,” said ASIC commissioner Peter Kell. “For this to occur, operators of comparison websites must take care to ensure they accurately portray the features and limitations of the products compared. They also need to ensure that any information they provide, including quotes, is reliable, accurate and up-to-date.
“We will be targeting this area of the market and we will take regulatory action where necessary to ensure that operators of financial product comparison websites comply with the law,” added Kell.