Final FCA rules for price comparison websites

The Financial Conduct Authority (FCA) has published its final rules for price comparison websites in its policy statement (PS 16/15), which came into force on 1 December 2016. Ian Norman, partner, and Rajiv Agarwal, regulatory advisor, at Lightfoots LLP, examine and assess the key changes, their likely success, as well as the challenges that lie ahead.

What are the key changes brought about by the coming into force of the FCA’s new rules on price comparison sites?

The key provisions introduced in relation to high-cost short-term credit (HCSTC), contained in new section CONC 2.5A in the Consumer Credit Sourcebook (CONC) within the FCA Handbook, set out the additional requirements covering the following areas:

Rankings

When credit brokers act as price comparison websites (PCWs), they would be required 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

PCWs are required as part of any financial promotion or addition advertising 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

PCWs comparing HCSTC are required 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.

What problems are the new rules trying address? How successful do you think the new rules will be in doing so?

The Competition and Markets Authority (CMA) published

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