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Comparison websites have experienced exponential growth in the past five years as consumers increasingly rush online to research products and services.
This has certainly been the case with financial services, with comparison sites now providing critical leads to lenders and broking groups, as well as key product providers across the insurance and wider banking industry.
Mortgage Business was at the 10th Annual Loan Origination Excellence conference in Sydney last month to get the story on how these digital disruptors are shaping the home lending landscape.
During a panel session chaired by former Resi CEO Lisa Montgomery on February 25, Pepper’s Mario Rehayem and Andrew Russell of Mortgage Choice shared their concerns over the widespread use of comparison websites as a first port of call for many prospective borrowers.
Mr Rehayem warned that a number of comparison sites need to be “very careful” with the information they provide.
“Some of them have outdated information about products and about information on the industry as a whole,” he said.
“When we are in an age when people are self-diagnosing their health online, people are really taking these blogs and this information to heart. That is a dangerous thing.”
However, when the information is correct and is audited consistently, Mr Rehayem said it is another avenue via which the lender can push its product.
He suggested more regulation is needed to ensure comparison websites provide accurate information to consumers. This could come in the form of increased internal auditing processes, he said.
“At the end of the day, that is like a broker telling a client something that is incorrect,” he said. “They would get punished for that, so why shouldn’t a comparison website?”
However, Pepper Group's director of sales and distribution said that, on the whole, comparison sites are an excellent lead generation tool for lenders and brokers.
“Lead generation is going to be the biggest thing for mortgage brokers going forward,” he said. “These guys [comparison websites] are the new-era mortgage broker. They are no longer relying on word of mouth or referrals from agents. They are relying on digital.”
In an earlier presentation, HomeStart Finance's general manager of retail, John Rolfe, noted that 83 per cent of consumers read user-generated content about financial services.
“So they want to know what their friends are saying, what their experience has been,” Mr Rolfe said.
“You know how we always use the story about the chap around the barbeque? It’s not the barbeque anymore. It’s Facebook, Instagram, and Twitter.”
Andrew Russell, general manager of product and distribution at Mortgage Choice, observed that comparison websites have been taken up well by the consumer and have provided a great service.
“I am all for it in terms of education,” Mr Russell said.
Mortgage Choice has its own comparison site, Help Me Choose. Over the past six months, the listed group has significantly ramped up its investment in personnel and technology across its online business.
Mr Russell highlighted the importance of disclosure across all financial services distribution channels, using the example of health insurance to illustrate the point.
“The consumer needs to recognise the fact that they might be getting a health check on their health insurance but the product that is suggested to them needs to be questioned,” he said.
“Is it the right product for them or has it been negotiated with the best commission terms with that provider? There needs to be more work done there.”
Mr Russell said he sees “great opportunities” for groups like iSelect in the mortgage space, and believes online comparison sites will be able to provide valuable information to consumers.
“Lenders are willing to put their products on these panels and then have broking firms attached to those organisations close those customers down in real time,” he said.
However, independence remains a challenge, he added.
“The regulators will be looking closely at that over time as they [comparison sites] undoubtedly grow.”