Code of conduct for personal finance comparison web sites?

The Resolution Foundation has today called for a voluntary code of practice for price comparison websites following new research it has published assessing the leading sites comparing financial products.

The Foundation’s research highlighted the important role comparison sites play in helping consumers make informed financial decisions.

A poll commissioned from Yougov to support the research showed that 45 per cent of people have used a comparison site to help them make a financial decision in the last year.

However, the research also showed that many sites fail to explain the commercial relationships they have with product providers. This risks misleading consumers who can easily mistake promotional features such as ‘best buys’ and ‘editor’s choices’ as being the best value products on the market.

The Resolution Foundation is therefore calling for a voluntary code of practice to build on the strengths displayed by the sites and address the weaknesses identified by the research.

Phil Hall, a spokesman for financial education charity, the ifs School of Finance, said: “Price comparison sites can certainly be a useful tool in helping consumers to make more informed financial decisions which is why we ensure students taking our GCSE, AS and A level equivalent qualifications in personal finance gain some experience of using such sites as part of their course.

We are very clear that some sites may not explicitly explain their commercial relationships which can give rise to misleading results. So, students are not only getting into the habit of comparing different financial products, they are also learning to be cautious about the information they receive and to be wary about relying on any single source of information.”

In response to the Resolution Foundation’s calls for a code of conduct for such sites, Phil Hall added, “The introduction of a voluntary code of conduct seems like an eminently sensible idea and I trust that the research and suggestions put forward by the Resolution Foundation will be carefully considered by comparison site providers.”

Clive Cowdery, Chairman of the Resolution Foundation said: “Comparison sites are valuable in making informed financial decisions - but many sites are undermined by a lack of transparency about their commercial relationships. A voluntary code of practice would address this and encourage a growing market, without the need for further regulation.”