The Competition and Markets Authority (CMA) just hit price comparison giant ComparetheMarket with a £17.9m fine. But what happened? Well, it’s a little complicated, but we’re here to make it simple. Here’s what the ComparetheMarket fine means for you, and some tips for using price comparison sites.
What is ComparetheMarket?
ComparetheMarket (CTM) is one of the biggest price comparison websites in the UK. It’s best known for the ‘simples’ catchphrase and its meerkat adverts, and it helps consumers compare deals on everything from car insurance to broadband packages.
But how does CTM make money? Well, it’s free for consumers to use it, so it works on a commission model. CTM earns a commission from service providers whenever consumers sign up for new products through its website.
Essentially, it’s in CTM’s interest to help consumers find great deals – at least, that’s the theory. Here’s why it’s not so ‘simples’ after all.
What’s the story behind the ComparetheMarket fine?
It all comes down to home insurance, of all things. Let’s break down what happened.
- Between 2015 and 2017, CTM put clauses in contracts with home insurers to stop them offering cheaper insurance deals elsewhere.
- In other words, insurers couldn’t offer better deals to consumers on other price comparison websites.
- As a result, the other websites couldn’t grow or expand their customer base because they couldn’t compete with CTM’s deals.
Here’s an example to make it clearer.
Say Insurer A offers home insurance at £15 per month on CTM. But maybe they want to sell the same insurance at £13 per month on another platform. They can’t do this, because it’s breaking the contract with CTM.
Overall, CTM’s behaviour resulted in higher insurance premiums for everyone. When we look at it this way, we can see why the CMA fined them.
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Should I still use price comparison websites?
Okay, so we’ve covered the ComparetheMarket fine and what went wrong. But does this mean you shouldn’t use price comparison sites anymore?
No, not at all. All it means is that you should use more than one. Don’t assume that the first deal you find is actually the cheapest option out there, because there’s a real chance insurers offer better deals on other platforms.
Put simply? Price comparison websites are still hugely valuable tools, but you need to use them wisely. Here’s what to look for.
- A good variety of vendors to choose from
- Ability to directly compare multiple quotes
- Easy ways to adjust your quote as you go along
- A clear breakdown of the coverage on offer
It’s also great if the comparison site saves your quote preferences for you to come back to at a later date.
How do I get cheaper home insurance?
So, ComparetheMarket’s fine aside, we’re clear that there’s no problem with using comparison sites (including CTM!). Here are a few options to choose from:
- MoneySuperMarket: you can choose from over 55 vendors, and the filters make it really easy to compare deals.
- Quotezone: this website is great for highlighting special deals and helping you compare optional extras.
With all that in mind, here are some suggestions for finding cheaper home insurance – or any insurance, really.
- Only take out as much cover as you actually need. For example, most rental tenants don’t need buildings insurance, but they should still get contents insurance.
- Upgrade your home security by installing a burglar alarm, window locks and additional door locks.
- Check insurer websites individually, because they don’t all advertise through comparison websites.
What can I take from the ComparetheMarket fine?
The key takeaway? Whether you’re shopping for insurance, financial products or utilities, it pays to do your research. Don’t rely on just one price comparison website, and always check to see if the same insurer offers a better deal elsewhere.
Despite the ComparetheMarket fine, there’s no reason you can’t check out the platform – just make sure you shop around before you sign anything.
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