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Comparison sites may fall foul of MMR advice rules

Comparison websites could face a major shake-up as a result of the mortgage market review proposal to ban non-advised sales.

The final MMR consultation paper, published in December, proposes that the majority of interactive mortgage sales must be advised.

Financial consultancy Bovill is advising brokers and lenders on the MMR’s impact on their business. Bovill consultant Kate Robinson says if comparison websites ask consumers questions it could be construed as interaction so must be advised.

She says: “The consequences could be serious for firms that are currently inadvertently operating an advice service without the correct FSA permissions.

“They will have to cease trading until they have sought a variation in permission from the FSA, which is not an overnight exercise.”

She says aggregators and comparison websites will have to assess whether a mortgage is appropriate based on the consumers’ needs and circumstances for all sales.

She adds: “This will be costly and time-consuming, and may mean aggregators and comparison websites drop out of the market.”

Robinson says the proposals could also deter innovation and competition.

Leadpoint director of marketing and partnerships Justin Rees agrees that comparison websites looking to enter the market could be deterred by the new rules.

He says a number of websites operate as glorified best buy tables rather than conducting proper comparisons on mortgages as is done for car or home insurance so they may not be affected by the MMR rules.

But he adds: “There are a number of companies developing mortgage comparison tools and the new rules could stop them from developing their online solutions further.”

Frank Eve Consulting managing director Frank Eve does not think advice will be needed and that comparison websites could provide an execution-only avenue for lenders.

He says: “I would expect the proposals to allow comparison websites to provide an execution-only vehicle for lenders if they can get connectivity to lender decision engines.”

Eve adds that the MMR will have unforeseen consequences and it will take time before the market is aware of what the rules mean in practice.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. ABOUT TIME !!!!!!

  2. Lenders will find a way to drive execution only – you mark my words – they will search for and exploit the rules to find the weakest link in the distribution chain and there you have it.This may not be apparent until the rules come into play.
    What aint going to happen is that brokers will have any significant advantage out of this.Quite the opposite – we will have all the costs and rules heaped on us,and this is because, primarily, we are customer facing.
    Just like the RDR, the impact will be that to go to a broker a customer will have more paperwork to complete and more expense.Yet again, the FSA looks as though it wants to set a controlled market which is fine as long as you dont have a great big gaping hole in the middle.

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