Top deal or no deal?

Consumer trust in the ability of comparison websites to deliver is waning. Anthony Keane reports

COMPARISON websites have boomed in the past decade by helping people find financial products online, but new research suggests our faith in them has faltered.

Three-quarters of Australians don’t trust comparison sites to give them the best deal, a study by auction-style banking marketplace Lodex has found.

It surveyed more than 1000 people and discovered that 45-54 year olds were least likely to expect the best deal. A separate analysis by moneysaverHQ of several comparison websites found that only a handful of thousands of financial products were listed. And many of the biggest providers – and best offers – were omitted.

“Trust in the industry has been eroded because these comparison sites are often conflicted by the way they make their revenue or in their ownership structure,” Lodex co-founder and co-CEO Mic Phillipou said.

“Consumers can be exposed to offers that are very broad, and a lot of offers are not relevant for a significant portion of the population.”

Australia’s most popular comparison websites include Finder, Compare the Market, Mozo, iSelect and RateCity.

Mr Phillipou said financial comparison websites could be valuable research tools, but people should also seek advice from their existing bank or broker, and educate themselves about products, prices and their own financial situation. “Once you have a strong foundation you are in a much better negotiating position,” he said.

The Australian Securities and Investments Commission has previously issued warnings on comparison websites after finding some created impressions that their comparisons were broader than they actually were.

ASIC’s MoneySmart senior executive leader, Laura Higgins, suggested consumers shop around on comparison websites and product providers’ direct websites before making decisions.

“Keep in mind that comparison websites are businesses that make money in various ways, sometimes through sponsored or promoted links and commissions,” she said.

“When using insurance comparison websites be aware that price is not the be-all and end-all. Price is only one feature. The most important thing is that you have the right type and level of cover.”

A Suncorp spokeswoman said price comparison websites provided a skewed view of a product’s value and benefits.

“The sites present price as a key determining feature, but value is more than just price,” she said. “Understanding all the features of a financial product is essential to ensuring you select a product that covers all your needs. This is particularly important to those at risk of being impacted by natural disasters.”