The Future of Digital Comparison Tools
Price comparison websites (PCWs), also known as digital comparison tools (DCTs), are taking on an increasingly pivotal role in crucial markets. Competitive markets can help people navigate complex marketplaces and save them hundreds of pounds. Because of this they can help balance out economy-wide challenges of stagnating wages and living standards and play a crucial role in covering any shortfall in consumer incomes. Regulators, and the government are increasingly putting DCTs at the centre of solving problems with key markets. As a result, DCTs find themselves in a more privileged position than previously, recognised to be a key part of the consumer experience with more customers being steered towards using them. To a great extent, this position reflects the success DCTs have had in engaging consumers in markets.
This increased responsibility raises questions about how DCTs behave and where they sit in the landscape. DCTs can blur the boundaries, acting at various times as commercial businesses, consumer champions and implementers of government and regulatory policy. Yet these roles are frequently contradictory. The activity of DCTs is starting to fall behind the expectations implied by these new and varied functions. The CMA has published the updated findings from its market study into digital comparison tools - a path that could possibly lead to a full scale investigation and will make recommendations for the future operation of DCTs.
This paper does not cover as wide a set of industries as the CMA’s inquiry. It focuses more on essential services such as energy and telecoms and high value/often purchased financial services products, including insurance. The paper sets out the improvements we would expect to see from the DCT sector in the coming months and year, in line with their increased responsibility. These include:
An emphasis on clarity and accessibility to help unconfident consumers. This is the most pressing concern, our research highlights that rather than creating incremental gains for already engaged consumers, the main task of policy makers should be to engage currently excluded consumers who, due to their lack of digital skills and confidence, are unable to access the best deals in essential service markets.
Encouraging providers who offer whole-of-market or comparison-of-comparison services, but recognising that barriers to unconfident consumers’ participation are far more fundamental than whether the last few % of deals are included in search or not.
Ensuring consumers can get a ‘good enough’ deal on the first DCT they go to, and do not have to multi-home.
A cross-industry code of practice that either upgrades or replaces Ofgem’s current Confidence Code and Ofcom’s accreditation scheme.
The inclusion in the cross-industry code of requirements to show when commission is being taken, and preventing the privileged display of commission-carrying deals.
It accompanies a report from Illuminas, who carried out interviews with users and non-users of DCTs to understand consumer behaviour and attitudes.