ASIC sues Choosi over ‘misleading’ insurance searches, regulator turns up heat on comparison site disclosures

The corporate regulator wants to know why comparison sites are preferencing one product over another. ‘It’s a pretty cosy relationship and certainly not disclosed to consumers,’ ASIC says.

ASIC deputy chair Sarah Court said the regulator is concerned about attempts to mislead consumers. Picture: John Feder/The Australian.

The corporate regulator is casting its eye over financial services comparison websites after taking Choosi to court, alleging the comparison site misled consumers by falsely presenting them with an illusion of choice.

In court papers filed on Monday, the Australian Securities & Investments Commission alleged Choosi, which offers customers the ability to search and compare a variety of insurance products, misled them about funeral and life insurance policies.

Instead of showing customers offerings from several underwriters, ASIC alleges Choosi showed them products from global insurance giant Hannover Life.

ASIC claims Choosi banked $61m in return, as part of a scheme in place from at least July 2019 and which remains ongoing.

The corporate regulator claims Choosi sold at least 4225 funeral insurance policies and 9478 life insurance polices through this “false” comparison.

Choosi has heavily advertised on commercial television to market its products to consumers.

A spokeswoman said Choosi was “aware of the concerns raised by (ASIC)”, and was currently reviewing the allegations.

“We are committed to making any necessary changes that best serves our customers,” she said.

ASIC deputy chair Sarah Court said customers were “denied genuine choice” by Choosi.

“Comparison websites must provide a meaningful comparison service and not simply operate as a sales channel or distribution platform for companies,” she said.

The Choosi matter came to ASIC’s attention after surveilling how insurance was being sold to Australians.

“Insurance as we know is a growing concern for many consumers, it’s difficult to afford for many people and hard to access,” Ms Court said.

ASIC deputy chair Sarah Court warns of a “cosy” relationship between comparison sites and the companies behind the products they show. Picture: John Feder/The Australian

Ms Court told The Australian ASIC was intending to send a clear message to other comparison site operators by suing Choosi, as the regulator was aware many presented “a very select few policies”.

“The other real challenge for consumers is to understand these are commercial businesses, these comparison sites they have to get their money in one way,” she said. “It’s a pretty cosy relationship and certainly not disclosed to consumers.”

Comparison sites have increasingly grown to dominate the distribution and advertising of financial products.

The likes of Finder, Mozo, Canstar, RateCity, iSelect, and Compare The Market are crowding out the Australian market.

However, some groups have raised concerns about opaque deals and how they serve consumers seeking financial services.

Ms Court said ASIC was interested in why sites rated one product above another, and what commissions were being paid by the product providers.

Ms Court said all sites should disclose kickbacks for products being advertised and sold.

“I don’t think the business model is in of itself inherently problematic, the issue is what is exposed to consumers,” she said.

A Canstar spokeswoman said the comparison site disclosed all its commercial relationships “openly”, including those that have a referral fee.

“All our disclosures state we don’t compare all products or providers in the market, but endeavour to show as many as possible,” she said.

A Mozo spokeswoman said the company, when comparing insurance products, made “it very clear at the top of the table that we may receive payment, and that we do not compare the entire market”.

Originally published as ASIC sues Choosi over ‘misleading’ insurance searches, regulator turns up heat on comparison site disclosures