Comparator websites in watchdog's sights

The consumer watchdog has put comparator websites on notice, saying they must boost transparency.

Users should be given more information about how rankings and comparisons are formulated, the Australian Competition and Consumer Commission says.

That includes better disclosure of commercial relationships that may influence how certain goods and services are ranked.

Comparator websites let users weigh up goods and services, often on complex products such as mobile phone plans or health insurance.

Done right, they can help consumers make more informed decisions while also helping smaller companies compete, said ACCC Deputy Chair Delia Rickard.

"However, the ACCC is concerned that poor conduct by some industry participants may undermine these benefits and mislead consumers," she said.

"Players in the comparator website industry are on notice that we are watching."

It follows a $10,200 penalty secured by the ACCC against Compare The Market in August for falsely advertising its health insurance comparison service.

In 2012, comparator website Energy Watch was ordered to pay $2 million over a misleading advertising campaign.

The ACCC is planning to release best practice guidelines for comparator websites early next year.