Sixty Seconds on Aggregator Regulation

Richard Nolan

Operations Director

The Financial Services Forum

The growing influence of price comparison websites and their lack of transparancy is worrying many in the industry. Is their influence beneficial or detrimental to consumers?
Regulation is an impossible task
Stuart Glendinning Director,
When The Clash were doing White Riot I was listening to Hotel California. When The Jam were storming the charts with Eton Rifles I was into Supertramp’s Crisis, What Crisis. I didn’t like skateboarding, I never bought coloured vinyl and, oh yes, I was in the Scouts. How unhip can you get?
Well, guess what, I’m now – at the tender age of 44 – in the hip crowd! Yeah, now I’m a ‘cool cat’ ‘cos I work for a price comparison site and let’s face it that’s where the action is at baby! Some guys flew in from the big US of A, paid a slug of money for Uswitch and then, hey presto, comparison sites were practically being launched by the week. It’s official! You can make millions by launching a comparison website. MBA students from Harvard to Shanghai Jiao Tong (University) are busy writing their theses on the modern day magic formula to business success.
Like all fads comparison will soon be so ‘yesterday’ but obviously from my perspective hopefully customers will still be seeking price comparison in the future – wife and kids to feed, bit long in the tooth to find a new trade, you know how it goes. Fortunately, to date, price comparisons has been popular and why shouldn’t they be? Consumers like to be empowered. That’s why the ‘best buy’ tables in the press used to be so popular and that’s why best buys that can be tailored to your needs and kept completely up to date are so popular on the Internet. It’s possible they are losing some gloss though. Some practices adopted by some sites are tawdry and there is a legitimate worry that this could tarnish the whole sector. There is even talk of regulation albeit the Resolution Foundation (no I hadn’t heard of them either) has called for a Code of Practice. To be honest I have never been a great admirer of regulation. It always seems to create massive workload and cost, deliver minimal benefit to the consumer and causes a trail of unforeseen knock-on implications.
I reckon the fiasco with Northern Rock has put paid to any chance of price comparison being regulated. With the FSA and the Bank of England lobbing grenades at each other I imagine that the insatiable appetite that even a quango like the FSA has to expand will be stifled for a while. Anyhow, even if they had the will it seems like a minefield. I have just input the word ‘loans’ on Google and it says there are 165 million sites that can help me. Who the hell would want to regulate that!
The Resolution Foundation is probably on the right track calling for a Code of Practice but when I read their wording I fell off my chair, banged my head on a table and nearly choked on the ham and piccalilli sandwich I was eating and nearly killed myself. I haven’t written a Will so I’m not ready to go just yet!
Naturally I have been speaking to my solicitor about suing the Resolution Foundation – it being pretty obvious to anyone that what they were proposing was so poorly thought out it could trigger a response that could result in injury to anyone working within a price comparison site! Fair enough – that was just for starters – but I’m not sure that leaving this matter to the price comparison sites to sort amongst ourselves is too smart either.
With regard to the product providers there is no reason why price comparison sites shouldn’t remain popular. Apart from the fact there are huge numbers of prospective buyers in ‘buying mode’; the cost of acquisition is low. Although providers may mourn the onset of commoditisation of personal finance products, I see little sign of this trend abating, other than perhaps some providers being more adept at linking products.
To read all the Member comments, please view the PDF version.

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