FCA have introduced new rules for price comparison websites (PCWs) in relation to high cost short term credit (HCSTC) sector from December 2016, following a review of the recommendations by the Competition and Markets Authority (CMA), to improve standards of fairness and transparency with a view to ensuring best outcomes for consumers who use PCWs to buy HCSTC products.
Key provisions introduced by FCA have been set out in a new section CONC 2.5A in the Consumer Credit Sourcebook (CONC) within the FCA Handbook, which include the additional requirements as below:
- Rankings: New rules require credit brokers acting as price comparison websites (PCWs) to rank HCSTC products in ascending order of price according to the Total Amount Payable (TAP) and to display the information in a way that neither the ranking of search results for products nor the prominence of their display is based on the firm’s commercial interests or its commercial relationships.
- Advertising: The provisions require any financial promotion or additional advertising by PCWs for HCSTC to be outside of the ranking table and not interspersed within them, with the search results being clearly distinguishable from any other financial promotion. FCA has also added guidance to clarify that all information displayed on the price comparison website must comply with the requirement to be ‘clear, fair and not misleading’ and the detailed rules in CONC 3 and, in particular, CONC 3.5 through the inclusion of a representative example.
- Website search functionality: New requirement for PCWs comparing HCSTC products to enable consumers to search according to the value and duration of the customer’s desired loan.
- Market coverage: PCWs are also required to list in one place on the website the brand names of lenders they compare.
The main challenge for firms is to ensure implementation by the deadline of December 2016, not considered enough by some firms to make system changes after receiving and reviewing the relevant information from each of the lenders. The ongoing challenge will be for lenders to keep PCWs updated as and when they introduce any changes to the product features to ensure due compliance with the new disclosure requirements.
(Ian Norman and Rajiv Agarwal were interviewed by LexisNexis recently to provide their views on the above changes. The Interview, as published on LexisNexis website, is attached for information of readers)