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FCA plans for broker ratings tool may impact referral fee relationships

  • 04/05/2018
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FCA plans for broker ratings tool may impact referral fee relationships
The Financial Conduct Authority (FCA) has revealed it plans to work with mortgage intermediaries to help consumers compare brokers.


The plan for a comparison tool is part of the FCA’s interim report into the mortgage market and is intended to make it easier for consumers to assess the strengths of different brokers.

It also noted that the process could have an effect on referrals to intermediaries from estate agents and/or developers, with consumers being better placed to identify whether the intermediary to which they are being referred offers the level and quality of service that they want.

This could complement proposals by the Ministry of Housing, Communities and Local Government aimed at creating more transparency around referral fees.

These include the potential for standardising the presentation of referral fees and ensuring that customers are made aware of any potential referral fee before they decide whether to purchase.

The FCA highlighted the importance of consumers being informed about the market and said doing so could drive up quality among intermediaries and improve competition between them, with those intermediaries better meeting customer needs being rewarded with more business.


Comparison points

Factors which the FCA suggested could be used to identify differences between intermediaries include:

  • fees
  • areas of expertise/relevant markets and products covered
  • whether a panel is used and, if so, the lenders on it
  • distribution/concentration of business to particular lenders
  • number of complaints

While not tying the tool to these metrics, the regulator said its report findings pointed to the benefits of intermediaries considering a wider range of lenders.

“We found that on average a consumer’s choice of intermediary makes a difference to the eventual cost of their mortgage,” it said.

“In particular, we have observed links between more expensive mortgages and intermediaries that typically place business with fewer lenders. But there are few tools to help consumers choose an intermediary.”

The FCA added that any proposal would also need to consider how best to ensure the information gains traction with consumers.

The regulator said it will give the mortgage intermediary sector (including potential entrants) the opportunity to propose ways to achieve this.

The FCA is asking for feedback by 31 July 2018 to




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