Dec 20 – New routes to market

Before the ink has dried on the £17.9m fine imposed by the Competition and Markets Authority on Compare the Market for breaching competition law by imposing wide ‘most favoured nation’ clauses on providers of home insurance, they have announced a tie up to deliver execution only remortgages to consumers embracing a range of household mortgage brands.

I have always struggled to work out how you can look across the market and complete an execution only mortgage or remortgage.  I can see how a product transfer is possible, although perhaps not always desirable.  But the information you need from a customer to choose between types of mortgages and then lenders makes true execution only impossible, particularly the information needed by the new lender.

Koodoo said of Compare, “its scale and deep understanding of customer needs will help enhance the service”.  This hardly looks like an execution only approach.

I am sure that the lawyers have worked hard to deliver watertight contracts between Compare The Market, Koodoo and the lenders who have signed up.  My concern will be what will happen in the event of any complaints, Ombudsman findings, and the potential for liability on the FSCS.  Brokers have tales aplenty of consumers making the wrong self-selections.

I hope this works well but it defies my understanding of what is permissible under FCA current rules and guidance.

Robert Sinclair
Chief Executive, AMI