The Competition and Markets Authority has launched a review of digital price comparison websites and apps to see how they work and whether how they are paid is clear.

The CMA says its review will consider a number of concerns about DCTs. First, whether consumers would benefit from being made more aware of how DCTs earn money, and the impact this might have on the services they offer. Secondly, whether arrangements between DCTs and the suppliers that sell through them might restrict competition.

The review may have implications for robo advice and other online financial services websites which compare products and allow switching.

The CMA will announce within six months whether it intends to refer the market for a more in-depth investigation and will publish a report within 12 months, setting out its findings and the actions (if any) it proposes to take.

The CMA will study digital comparison tools (DCTs) which enable consumers to compare products and services on quality as well as price and help them switch between suppliers. These range from price comparison websites to smartphone apps. The CMA says that its reviews of sectors such as motor insurance, energy and banking have highlighted how these tools can play a “powerful role” in increasing competition and helping consumers.
This new study will also consider how to “maximise the potential benefits” of DCTs for consumers and reduce any barriers to how they work.

Andrea Coscelli, CMA acting chief executive, said: “Since emerging a decade or so ago, such tools have helped to inject significant competition into a number of markets. They have made it easier for consumers to engage in many markets. 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 to ensure consumers and businesses can benefit from them more widely.
“Some people have also raised concerns about certain issues, including whether consumers can trust the information that’s available and the study will look at these issues too.
The study will address four key themes:
• what consumers expect from DCTs, how they use them and their experiences
• the impact of DCTs on competition between suppliers listed on them
• how effectively DCTs compete with each other
• the effectiveness of existing regulatory approaches to DCTs

The CMA’s working definition of a DCT is: web-based, app-based or other digital intermediary services used by consumers to compare and/or switch between a range of products or services from a range of businesses. They may allow consumers to compare price, product characteristics or various measures of quality. DCTs typically do not enter into the primary contract with consumers.

The CMA is inviting views on the issues raised by the study by 5pm on 24 October 2016.