ASIC warns mortgage comparison websites on accuracy, disclosure and compliance
Home loan comparison websites will face greater scrutiny from corporate watchdog ASIC to ensure they provide accurate information and are not misleading consumers.
This follows growth in the number of comparison websites since GFC, filling a need for consumers to be sure they are getting the best deal on mortgages, credit cards, insurance and other products.
However, ASIC has identified a number of concerns with some comparison websites, including that some only compare a limited number of brands/products from a limited number of providers.
“This may not be clearly disclosed which creates the impression that the extent of comparison is much broader than it actually is,” says ASIC.
ASIC is also concerned at the use of ‘ratings’ and ‘rankings’ for products without a clear explanation of the basis for them and websites that refer to ‘special offers’ and ‘featured products’ without properly explaining the basis of selection of certain products.
“For credit comparison websites that advertise loan products, it is important that comparison rates are disclosed as required under the National Credit Code. Given the nature of comparison sites it is important that consumers are provided with accurate information so they can choose financial products that best suit their needs,” says ASIC.
“ASIC recognises that consumers can benefit from the increasing opportunities to research and compare financial products online. For this to occur, operators of comparison websites must take care to ensure they accurately portray the features and limitations of the products compared. They also need to ensure that any information they provide, including quotes, is reliable, accurate and up-to-date,” says ASIC commissioner Peter Kell.
"We will be targeting this area of the market and we will take regulatory action where necessary to ensure that operators of financial product comparison websites comply with the law," he says.
The increased scrutiny of comparison websites was welcomed by Rohan Gamble, managing director of Mozo.com.au.
Gamble told SmartCompany.com.au the aggregator industry is filled with so-called affiliates, who simply create an aggregator product that only compares their products.
“This type of announcement makes sure that we do the best we can. We’ve been waiting for this type of thing, and we take the view that we do this seriously, and that everyone else should as well.”
Comparison websites must comply with their obligations under consumer protection laws.
ASIC recently released a new regulatory guide for advertising financial products (Regulatory Guide 234 Advertising financial products and advice services: Good practice guidance), which includes guidance for comparison websites.
These include early disclosing the basis of awards or ratings, disclosing any links to the providers of products that are being compared, including commissions, referral fees, payments for inclusion in comparisons and/or payments for ‘featured’ products including a warning if not all providers are included in the comparison, clearly disclosing advertisements to prevent consumers being misled about the ranking of the product, and where necessary, including a warning that financial products compared do not compare all features that may be relevant to the consumer.