FTC drafts rules on exclusive selection of service providers
Published:Friday | September 19, 2025 | 12:08 AM
The Fair Trading Commission, FTC, has released draft guidelines that could shake up the system utilised by certain companies to select third-party service providers.
Customers are often directed to the so-called ‘panels’ for certain services, notably but not exclusively in the financial sector, but the FTC is concerned that the system ultimately stifles competition.
The commission is not recommending an end to such panels, however. Instead, it wants to bring more sunlight to the selection of entities that end up on such lists, and has proposed seven steps designed to help companies avoid practices that are deemed to substantially lessen competition.
“For example, mortgage companies typically direct customers to their panel of valuation surveyors when processing mortgage applications,” the FTC noted in the draft document, around which public comment has been invited up to today, September 19.
“The use of panels may result in the exclusion of otherwise qualified providers from complementary markets, thereby lessening competition,” the agency said.
The proposed rules indicate more decisive action by the FTC, which has weighed in on the issue in the past. A year ago, it recommended greater transparency in panel practices in a position paper; now it says failure to improve could trigger formal investigations or penalties.
“As such, businesses that manage panels would be exposed to enforcement actions by the FTC if they do not consider whether third-party providers in complementary markets would impose negative externalities on the business,” the document stated.
“The criteria for inclusion on a panel should be objective, transparent, and consistently applied,” it added.
Panels are often justified as tools to ensure quality and reliability — especially in high-stakes transactions, such as property valuations — the FTC acknowledged. But it also disapproved of entities acting as gatekeepers, barring qualified providers from market access.
In practice, the FTC reasoned, panels restrict customers from selecting nearby or preferred professionals, limiting them to a narrow list of valuators, attorneys, doctors, and other institution-approved providers. Customers typically receive these lists midway through service delivery, often as part of asset verification.
The seven guidelines are wide-ranging – businesses must document the ‘rationale’ for panel creation; define objective ‘quality control’ standards; treat all members fairly; panels must include at least three non-affiliated providers; panels should be reviewed every three years; there should be transparency in the selection process, including public access; and any selection or restriction must not be more burdensome than necessary.
Third-party providers, industry associations, and regulated entities are invited to submit comments on the proposed guidelines.