Price comparison website operator (MONY) slips 1.9% to 174p on news that the Financial Conduct Authority (FCA) will investigate the price comparison website (PCW) industry.


The City regulator will investigate 14 sites, including and the three other big players including Admiral (ADM)-owned and which is owned by private insurance outfit BGL. The third player is 49% owned by eSure (ESUR) and is rumoured to be lining up a float.


The FCA is reportedly concerned that consumers are buying inappropriate insurance policies based on price alone. It will investigate whether there is a potential conflict of interest when such sites are owned by insurance groups.


Commenting on the investigation, Numis analyst David McCann, says: ‘Moneysupermarket is the only major PCW that is independently owned… thus may avoid some of the concerns that insurer-owned websites are biased towards in-house brands.’


While playing down the dangers to Moneysupermarket, McCann does flag potential ‘tail risks’, one potential one being the application of Retail Distribution Review (RDR)-type rules banning the payment of commissions from the insurer to the PCW.


The application of such rules would ‘be disastrous for the PCW industry in our view, as we do not believe the end customers will be prepared to pay a fee to use PCW sites’.


Another tail risk would include the levying of fines or PCWs being forced to pay compensation to consumers, although the analyst concludes ‘this investigation is unlikely to cause any material negative financial consequences for either Moneysupermarket or the industry generally’.

Issue Date: 25 Nov 2013