The City watchdog today gave warning that some insurance comparison websites could be misleading consumers.

The Financial Services Authority (FSA) reviewed 17 comparison websites and found that the clarity, fairness and accuracy of information given to consumers could be improved in some cases.

Around 30 million insurance quotes were generated by comparison websites in 2007, as increasing numbers of consumers “shop around” for the best deal.

But the FSA has found a number of problems with the sites – for example, some of them use assumptions to generate quotes but do not allow consumers to review these assumptions, meaning consumers could end up with an unsuitable policy.

Other issues included sites giving details on policies that were inaccurate and out of date; sites failing to list all of the features of a policy; and information on the excess consumers would have to pay being wrong or misleading.

The FSA also expressed concern that the sites encouraged consumers to focus too much on price and not enough on the different features of policies.

Ed Harley at the FSA said: “Comparison websites should treat customers fairly and provide information that is clear, fair and not misleading. Consumers should shop around for the best deal, but it is important that they compare what’s covered by a policy, and not just focus on the price.”

The FSA has now provided firms with examples of good and bad practice to illustrate expected standards. It will follow up the review by visiting individual firms to test whether the information they provide is appropriate.

The British Insurance Brokers’ Association (BIBA) welcomed the review but said the FSA needs to take more decisive action to protect consumers. Steve White at BIBA said: “This is a great start, but the FSA must go further. Like brokers, comparison sites should guarantee their quotes.”

But Richard Mason from comparison website Moneysupermarket.com says: “It is encouraging to see most price comparison sites are treating customers fairly in terms of clarity and openness and the FSA deems no further action needs to be taken.

“Consumers know if you use a comparison site to obtain an insurance quote they cover not only the brokers but also most of the direct insurers too. That is why upwards of two-thirds of people are using comparison sites to find their home and motor insurance.”