James Daley: Unfair comparisons need regulation

The backlash against financial-comparison sites has finally started to gain a bit of momentum over the past few months, as a handful of new independent reports have turned the spotlight on their inadequacies.

Given that these sites are account for an ever-increasing proportion of sales in the financial services industry, yet remain almost completely unregulated, it has been left to industry analysts and journalists to keep them on their toes until now. And I'm pleased to say that we're making some slow but marked progress.

When I last wrote about these sites in this column a few months ago, I complained about the opaque commercial agreements which lie behind most of the services, and named and shamed one or two for particularly poor practice.

Chief among these was Moneysupermarket – the largest of them all – which was being more than a little economical with the truth in parts of its website – particularly its pet-insurance comparison service, which claimed to offer consumers a choice of more than 400 policies. On inspection, it became apparent that these 400 policies came from just three providers – which is hardly a sweep of the market.

When I last checked the site, the claim about 400 policies had been removed – a victory for Save & Spend – although I'm still not sure that the new wording is exactly fair and transparent. "Use our insurance tool to compare dog insurance policies and buy the best value policy for you and your pet," it boasts. Quite how you can be sure you've found the "best value" by getting quotes from just three providers, I'm not sure. But it's certainly a step in the right direction.

One comparison site that has not paid heed to Save & Spend's warnings is uSwitch, which is still less than clear on their credit-card comparison service. If you go to uSwitch's credit-card home page, you'll be presented with a interactive table entitled "Our top deals". You can then select whether you're looking for the best balance-transfer deal, the best 0 per cent offer on purchases, the lowest APR, or the highest cashback – and under each option, uSwitch will present you with five cards.

Given the headline, you'd be forgiven for thinking that these were the best deals that you could find on the site. In fact, what the headline should say is: "The top deals from providers who have paid us a handsome fee to have their credit cards displayed prominently".

The longest 0 per cent offer on purchases is currently offered by Halifax – a full 15 months. Uswitch's table, however, lists Barclaycard's 10-month offer as the best: hmmm.

Worse still, it even breaks its own rules. Underneath the table is a little disclaimer stating that each provider will only be listed once, even if they have more than one card with the same length of introductory offer. Yet Barclaycard's Platinum card appears at number one and two in the table. Incidentally, Barclaycard also features in the fourth and fifth slots – meaning that amongst its list of five top deals, Barclaycard features four times! And yet uSwitch has the temerity to describe itself as "impartial".

A report out by Defaqto, the finance-industry analysts, this week warned that not a single comparison site came anywhere near to offering products from across the whole of the market. Alas, the industry is still largely driven by commercial deals, which we, as consumers, almost never get to hear about.

Although the Association of British Insurers is working with the industry on drawing up a code of conduct, I believe that there is a need for much more than a voluntary set of guidelines. The number of people using and trusting in comparison sites has leapt over the past few years, and the Financial Services Authority needs to step in to ensure that consumers continue to get a fair deal.