The City watchdog yesterday said it planned to review the regulation of insurance comparison websites following concerns that consumers could be buying unsuitable products.

The Financial Services Authority said it would be looking at whether the way the websites sold insurance constituted giving advice.

It will also consider if the assumptions some of the websites use as the basis for their quotations could lead to people being sold unsuitable products.

The move follows a warning from the British Insurance Brokers' Association that the rules governing the websites were outdated as they were written before the comparison sites were developed.

It said a third of consumers did not realise that the websites used assumptions as the basis for quotes and warned that unless the rules were updated, there was a danger that consumers could buy insurance products that were not suitable for them.

Research carried out for the group also found that the majority of people using the sites did not understand the difference between the different policies being offered and found the details given on them confusing.

Around 93 per cent of people also expected the sites to be regulated in the same way as insurance intermediaries.

An FSA spokesman said the regulator had looked at the sites before but it was now planning to review its regulation of them again.

He said: "In the light of this evidence from BIBA we think now is the right time to have another look and that is what we are going to do."