There are thousands of financial products available ranging from bank accounts and loans to credit cards, pensions, investments and insurance policies. The sheer choice of products on offer can be bewildering. Defaqto Star Ratings are designed to allow customers to quickly and easily identify where a particular product sits in the market based on the features that it offers.
Who or what is Defaqto?
Defaqto is an independent financial research and software company specialising in rating, comparing and analysing financial products and funds.
Since 1994, they have built the largest, whole of market, financial product database and become one of the leading providers of financial product and funds data in the UK.
Defaqto’s vision is to help people make better financial decisions. Star Ratings are a key element of how they achieve this, by providing an independent, unbiased mechanism for helping people instantly understand where a product or proposition sits in the market, based on the features and benefits it offers.
Their Star Rating system is widely recognised throughout the financial services sector. As they are independent, their ratings provide a reliable way to compare products at a glance. Star Ratings now cover nearly 50 separate areas within General Insurance, Wealth Management, Life and Protection, and Banking. Star Ratings can be a useful comparison tool but customers should still ensure they are familiar with the terms, conditions and features of any financial product they buy.
What do the Star Ratings mean?
Star Ratings award a product or proposition a rating of 1 to 5, depending on the quality and comprehensiveness of the features it offers.
Defaqto Star Ratings range from 1 Star (lowest level of cover) to 5 Star (most comprehensive level of features). These Star Ratings indicate the following general qualities:
A 1 Star Rating indicates a product provides a minimum level of features.
This rating indicates a product offering a fundamental level of features, with a few more benefits.
This Star Rating indicates that a product provides standard levels of features with a fair range of additional benefits.
This rating represents a product that provides a high level of cover with a good range of features and benefits.
This rating indicates a product provides quality cover and includes a comprehensive range of features and benefits.
They reflect the promise made by providers about the about the quality of a financial product and, rightfully, consumers have certain expectations of a product with a high Star Rating. They don’t necessarily know all of the details, but expect a 4 or 5 Star product to be among the best in its class and offer features that perform in that way.
Uniquely, Defaqto rates products not the providers and do not knowingly exclude any products in the areas covered by our Star Ratings.
How are Star Ratings calculated?
Defaqto's in-depth Star Ratings process assesses and analyses the terms and conditions, policy details and key features of every Star Rated product.
Star Ratings are calculated using a scoring method called Data Numerical Analysis (DNA). Each product feature and benefit is scored from 1 to 5, with a score of 5 denoting that the product has the highest characteristics in the market for that element; a score of 1 indicates it has the lowest.
Totalling the individual DNA scores across the chosen range of features and benefits gives an overall DNA score, which Defaqto uses to rank products in terms of their overall benefit to consumers. Defaqto also identifies appropriate levels that determine each of the 5, 4, 3, 2 and 1 ratings within each product area.
David Cartwright, Defaqto’s Head of Insight, says:
“Star Ratings are an independent and unbiased yardstick to help consumers gauge where products sit in the market in terms of the quality and comprehensiveness of the features they offer. The key is for people to focus on features, not just price, when comparing products to ensure they identify an appropriate product for their particular circumstances and thus make a good financial decision.”
Defaqto’s Insight Team – who are responsible for calculating the Star Ratings - all have extensive experience working within many parts of the financial services industry. They conduct regular market research, continually analyse product development activity through Defaqto’s unique and extensive network of relationships with almost all financial product and fund providers and attend conferences and seminars in order to ensure that their product knowledge is both thorough and right up to date. They work throughout the year to ensure that newly added features are included in the scoring process where appropriate.
Furthermore, the expert Insight team are supported by several internal specialist research teams who collect new and updated data on a daily basis powering the largest and leading financial product and fund database in the market.
Asda Car Insurance is rated as 5 Star by Defaqto (correct as of 15/11/12)Back to top