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 Financial Services Authority 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.
Justin Rees, director of marketing and partnerships at Leadpoint, 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, managing director of Frank Eve Consulting, 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.