Competition and Markets Authority to investigate price comparison websites

The UK's competition watchdog is launching a wholesale review into price comparison websites to investigate how they make their money and whether they really do help consumers get the best deals.

The Competition and Markets Authority (CMA) announced the review this morning – the latest in a long-line of high-profile probes the body has conducted including into retail banking and the energy sector.

The investigation will focus on whether the public are aware of how comparison websites, such as Compare the Market, Money Supermarket, Go Compare and Money Saving Expert, generate a profit, their links with insurance and utility providers, and whether the information they provide can be trusted.

The CMA said that while price comparison websites had ultimately "helped to inject significant competition into a number of markets", it noted "concerns about certain issues, including whether consumers can trust the information that's available". The CMA will focus primarily on comparison websites for car insurance, utilities and bank accounts, following on from its previous investigations into individual sectors and concerns over whether sites promote certain deals higher than others in their search rankings.

The probe will investigate awareness of how such websites generate income, often through commissions or partnerships, and whether their commercial models "impact … the services they offer … and whether arrangements between [the websites] and the suppliers that sell through them might restrict competition."

Announcing the review, Andrea Coscelli, acting chief executive at the CMA, said: "Digital comparison tools have played a big part in changing markets for the better, brining new ways of doing things and forcing businesses to up their game. Consumers have benefited as choice and access to goods and services have grown.

"However, they have been more successful in some sectors than others. We want to understand why this is the case and whether more can be done."

The government welcomed the review, as did consumer group Citizens Advice. Gillian Guy, chief executive of Citizens Advice said: "Many people assume price comparison websites are independent and that when they use them they will be presented with the cheapest deal in the market – but this is not always the case. Many services take commission from the companies they display. We think it should be much more clear to consumers how these websites select their deals."

The inquiry, which will run for an initial period of six months, including a four-week public consultation, will also look at competition between comparison sites and look at the effectiveness of current regulation in the sector.