Ahead of the Competition Commission (CC) publishes their provisional findings, which has been delayed again as reported by News from ABP on Friday, Paul Galligan, the managing director of Compare the Market, has warned the market would "rewind" by up to 10 years if the CC rules against controversial "best offer" clauses that are insisted upon by price comparison websites (PCWs).
The Sunday Telegraph outlined the scope of the investigation, which has extended to also look at motor insurance PCWs after requests from insurers who are angry about "most favoured nation" (MFN) clauses. The MFN clauses stipulate that insurers have to offer their "best prices" in order to for their premium quotes to appear on PCWs.
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However, Mr Galligan, whose firm has attracted particular anger for insisting on "wide" MFN clauses, defended the practice.
He said they are essential to the effective operation of price comparison sites and vowed that Comparethemarket.com would fight for their continued use.
"We know these clauses have made us unpopular in the marketplace with insurers," he said. "But, if you're going to appear on Comparethemarket, we expect your very best price. As a price comparison site, I can't possibly imagine a time when we could compare anything but.
"If you look at some of the language and hype that surrounds these clauses, the legalistic jargon and the arguments between insurers and the Competition Commission, there's a real risk that the needs of the consumer get lost.
"Without these clauses, the market would rewind eight, nine or 10 years and lose a lot of the transparency we've brought to bear. It would be a massive step backwards."
"Narrow" MFN clauses mean that insurers whose premiums are quoted on PCWs can only offer the same or higher rates on their own websites.
However, Comparethemarket is unusual in insisting on a "wide" MFN clause, forbidding insurers from offering a cheaper price anywhere in the market.
"We're not the focus of this investigation but I think we have the most proactive stance and that's something we're going to maintain," said Mr Galligan.
"We're confident the commission will see through a lot of the bluster and hype and realise that if these clauses are done away with, there's only one winner – the large insurers. And only one loser – UK consumers."
PCWs are now estimated to be used by more than half of UK consumers seeking new insurance quotes.
http://www.motorworldarc.co.uk/news.asp
