Lockdown leads to shift in market trends, reveals price comparison giant

Life under lockdown resulted in drastic changes for comparison website Moneysupermarket, it revealed today.

In a trading update the group, based in Ewloe, near Chester, said most sectors had seen a tightening as consumers sought to protect their assets.

And it declined to provide forward financial guidance for 2020, saying it is still to early to have full visibility on when, and how, the consumer and provider sides of its marketplace will be back to normal.

The group said that through this tough time for household finances, it has continued to help consumers make substantial savings on their household bills.

MoneySavingExpert has provided support to many people with more than 16m visits to its pages dealing with coronavirus-related problems.

It said it has continued to trade effectively through the period, benefiting from diversified revenue streams and strong cash conversion.

As at the end of May 2020, it had net debt of £0.8m, having paid the £46m 2019 final dividend.

It said the insurance sector is beginning to return to normal in motor insurance.

“Closed car dealerships significantly reduced car sales, which are a trigger for car insurance switching and loan demand.

“Across the market, car insurance search volumes declined by 22% year-on-year in April, recovering gradually in May to more normal levels in recent days.

“There are signs of lower car insurance premiums in April and May compared to last year, so we now view the likelihood of a return to premium inflation in 2020 as low.”

It said other key insurance channels were hit by the closure of estate agents and restrictions on home moving – UK residential housing transactions are estimated to have fallen by more than 55% year-on-year in April.

House transactions are a key prompt for consumers to buy or switch life and home insurance. In home insurance more than 10% of enquiries are normally from those who have moved home in the last month. As the housing market begins to re-open, Moneysupermarket expects performance will improve.

Also, travel bans continue to mean almost no demand for travel and travel insurance products.

In money, provider appetite for lending has tightened considerably.

The group said: “We have seen a very significant reduction in the attractiveness and availability of credit and banking products as lending criteria have tightened and interest rates have fallen, and we do not expect this to change in the immediate future.

“Market-wide search demand for credit products has decreased materially, down 37% year-on-year for loans and cards combined in April, caused in part by lockdown measures leading consumers to postpone significant spending.

“This impact was compounded by lower conversion as tighter lending criteria mean consumers are seeing fewer attractive search results.”

In April, the proportion of consumers eligible for loan products on the MoneySuperMarket site fell from above 85% to below 65%. These trends have persisted through the period.

Within the savings part of banking, early on the group saw consumers move rapidly to secure better rates. Across banking more broadly there is now a very significant reduction in the attractiveness and availability of products.

For home services, Moneysupermarket said attractive savings levels for consumers are driving strong switching demand.

“Consumers can still make large savings when switching their energy. A combination of market-leading offers and MoneySavingExpert’s editorial strength meant we saw strong growth in energy switching.

“Broadband has become even more important to consumers, and we have seen robust growth.”

The group also revealed that mobile has remained the primary device for users.

Chief executive Mark Lewis, said: “Through this difficult time for household finances the group has continued to help our customers save money – over £800m so far this year.

“The lockdown restrictions have had a significant impact across our marketplace.

“As the lockdown eases, we’ve seen motor insurance start to recover. But with substantially fewer financial services products on offer from providers, our money business is significantly suppressed.”

He added: “Our home services performance has remained strong, delivering growth ahead of the market as consumers take advantage of attractive energy offers and boost their broadband.

“We will shortly launch our energy auto-switching service on MoneySavingExpert, making it even easier for customers to save money.”

Russ Mould, investment director at Manchester investment platform AJ Bell, said: “While an entirely online business like comparison site Moneysupermarket has been in the enviable position of being able to operate throughout lockdown, today’s trading statement shows it has not exactly been business as usual.

Russ Mould

“This is reflected both in the continued suspension of forward guidance, the absence of any activity on travel-related products, and the significant pressure on its money division as lenders withdraw products from the market.

“Government pressure may see this situation reverse as the banks are encouraged to support a financial recovery, and elsewhere the company is already seeing some recovery in motor insurance switching as people return to the roads.

“The main bright spot in this latest update from Moneysupermarket is home services, which makes sense given how much time we are all spending indoors and our increased reliance on reliable and affordable broadband services.

“Like other operators in the price comparison space, Moneysupermarket is unveiling services which switch to the best deal automatically. The launch of an energy auto-switching service on its MoneySavingExpert site is imminent.

“The benefit for the business is that it should help retain switchers and, ultimately, could reduce the heavy marketing spend required to attract them.

“It will be interesting to see how central this is to incoming chief executive Peter Duffy’s strategy when he replaces current incumbent Mark Lewis in September.”