The FSA has written to the websites highlighting concerns over fair treatment of customers, following a review that found the websites were offering advice without the proper licence.
The letter called into question how the comparison websites were selling insurance and asked that the websites 'think carefully' about whether they are introducing or recommending certain policies without proper authorisation to provide financial advice.
James Daley, editor of Which? Money magazine said that the FSA action was long overdue.
"It is great that the FSA is finally holding the comparison websites to account. In the last couple of years the number of people buying insurance from these sites has risen exponentially. We raised concerns about the exclusions these websites' policies have and the prominence they put on price.
"If they want to play in this market they have to have regard for these rules."
For the FSA to say that comparison websites are falling short of their regulatory requirements is of great concern.
We think it is particularly important that the FSA has highlighted a concern that we share, where in many cases questions are pre-populated with default answers.
A key point that comparison sites fail to make customers aware of is that by conducting business this way, i.e. in a non-advised way, or ‘ execution only’, the consumer instantly sacrifices any comeback via the normal channels available to dissatisfied customers , namely the Financial Ombudsman Service , as this is only available to those who have gone through an advice process.
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