The intention by the Financial Conduct Authority (FCA) to deliver a broker assessment/comparison tool for consumers is wrought with difficulties and could end up being ‘anti-competitive’, according to a number of trade body representatives.
The trade body panel were speaking at yesterday’s FSE London exhibition in a session entitled, ‘A meeting of trade body minds’. It brought together representatives from six industry trade bodies – AMI, the Building Societies Association (BSA), the Equity Release Council, IMLA, PIMFA and UK Finance – to discuss a range of industry issues.
The FCA’s Mortgages Market Study Interim Report, published earlier this year, put forward a proposal to deliver a broker assessment/comparison tool which would theoretically rate all advisory firms on a series of measures, while allowing consumers to compare the quality and services of those firms before making their choice.
Robert Sinclair of AMI had already outlined, at an earlier FSE London seminar session, how AMI is involved in a working party with the FCA which is looking at ways to deliver such a tool. He did however admit that when it came to the ‘quality measures’ that would be used to distinguish one firm from another, the working party was “struggling”.
“If you’re comparing based on the number of complaints that a firm receives then this is just too obtuse,” he said. “For instance, only five advisory firms ever appear in the Ombudsman complaints data because they are the only ones that get enough complaints to make that list.”
Kate Davies of IMLA also expressed concern about how effective the tool might be, what data it would include and how consumers would react to it. “This could be over-engineered horribly,” she said. “You could simply throw too much information at a consumer, which they might not understand. Our view is that you should leave it to brokers to sell themselves. There is a danger of ‘sledgehammers’ and ‘nuts’ with this one.”
Paul Broadhead of the BSA also suggested that a tool could end up being ‘anti-competitive’ due to the way it might measure and rate firms, while Jackie Bennett of UK Finance questioned how you could measure the quality of firms in an independent and analytical way.
AMI’s Sinclair said that it was a real positive that trade bodies were speaking with “a great deal of commonality” in this area and others on the panel agreed that the FCA were much more likely to take note when a large number of trade bodies and member firms provided similar feedback.
