The FCA means well but comparing advice firms is fraught with issues.
To hear the FCA talk about the quality of advice firms and providing consumers with a useful way to compare them seems right, but the big questions around how it proposes to do this may not deliver the answers we would like to see.
I am all for looking at the quality of firms in today’s marketplace but how do you determine that? What metrics do you use to measure it? And how do you present that to the consumer?
Let’s start with some facts on this. The presentation of such data will have to be in a very simple form because, if such a ‘comparison site’ is to be of any use, the consumer will need to understand exactly what they are comparing.
But, of course, presenting such simple ‘facts’ runs you into trouble because the metrics used may be deemed too rudimentary. Will we compare just lender access or might we look at the quality of business? Whether it sticks, how many lenders are used, the retention process, fee structure, ancillary services…the list goes on.
And how will the ‘comparison site’ be policed? What if firms find themselves low on the list? What recourse can they take if they feel aggrieved about their data and placing? How will manipulation be prevented? What if the data becomes so dumbed down that the comparison becomes rather meaningless? All of this is just for starters.
So, while I welcome an opportunity for consumers to compare firms, I see a significant number of obstacles to overcome.
I will be intrigued to hear the FCA’s initial thinking on this area in the near future. A lot of brain power will be required to square this particular circle.
Bob Hunt is chief executive of Paradigm Mortgage Services