Defaqto star ratings to help advisers

By Nia Williams

02 Feb 2011

According to research by independent financial research company Defaqto:

94% of consumers compare the features of different products when choosing a financial product; and
86% of people see independent ratings as an important factor when making a decision.

Price will always play an important role in consumers' decision making. However, a feature-led approach to product development, marketing and advice by product providers and intermediaries is likely to result in a better match between what someone needs from a financial product and the product they end up buying, according to Defaqto.

Defaqto's star ratings aim to help firms understand the overall level of features and benefits offered by the different products on the market. They claim to provide an independent assessment of all products across more than 40 different product types within the following areas:

Mortgages
Current accounts
General insurance - including home, motor, pet and travel insurance
Investments
Life and protection
Pensions

Taking a wide range of features and benefits into account, Defaqto gives each product a rating from 1 to 5 depending on how comprehensive they are.

The star ratings aim to help firms by:

Supporting intermediaries' recommendations by giving a clear indication of the features provided by products they select for clients
Providing an unbiased view on the quality and standard of a product, allowing intermediaries to understand where a product sits within the wider market
Complementing intermediaries' product selection process by enabling them to group products easily based on the level of benefits they offer.

Commenting, Brian Brown, Defaqto's head of research, said: "It is essential that consumers match the features and benefits they need with those provided by the products they choose. If people focus on price alone they can run the risk of buying an inappropriate product that doesn't meet their needs - and they are only likely to discover this when it's too late.

"Our Star Ratings help product providers and intermediaries understand the overall level of features and benefits offered by a wide range of products. They can help providers take a feature-based approach to developing and positioning their products, and support the recommendations advisers make to their clients.”