The introduction of a code of practice for price comparison websites could help more consumers make informed financial decisions, it has been suggested.
In a report released earlier this week by the Resolution Foundation, it was indicated that many consumers make use of such sites when looking for the best rate on personal loans or other type of monetary product. The company also pointed to a poll commissioned by YouGov earlier this year, which revealed that 45 per cent of Britons have made use of a price comparison website in the last 12 months to help them reach a financial decision.
And although these portals were generally praised for their user friendliness, the firm suggested that by creating a voluntary code of practice for price comparison websites, people could become more knowledgeable when considering whether to borrow money. This in turn could them help to select cheap loans and other types of financial products more effectively. Implementing such moves, it was asserted, would also support the government's drive in boosting the country's financial capability and promoting a national generic economy advisory service.
The foundation also pointed out that the sector has successfully addressed previous criticisms such as the proposal that encouraging consumers to make "inappropriate" loan applications has damaged their credit ratings. However, it was suggested that improvement needs to be made in explaining the various technical terms and abbreviations associated with fiscal products.
Commenting on the study, Clive Cowdery, chairman of the Resolution Foundation, said: "Comparison sites are valuable in making informed financial decisions - but many sites are undermined by a lack of transparency about their commercial relationships. A voluntary code of practice would address this and encourage a growing market, without the need for further regulation."
