How can brokers evidence Consumer Duty standards by tapping into lender support?
June 2023
With the FCA’s much talked about new Consumer Duty standards now in force, expert advice can help brokers ensure they continue to meet these regulations.
Understandably, there was some nervousness surrounding the changes, but the new regulations are really just reinforcing good practice which is already widespread in the intermediary mortgage market.
According to the FCA, “the Consumer Duty will set higher and clearer standards of consumer protection across financial services and require firms to act to deliver good outcomes for customers”. [1]
With the right support, this should be a relatively straightforward task for brokers. But if brokers are unsure, what steps can they take to demonstrate they are meeting the new standards?
Lean on support
Collaborate with lenders
The Consumer Duty requires brokers and lenders to work together to make sure they are offering products and services that provide fair value, with a reasonable relationship between the price consumers pay and the benefit they receive. Just as brokers work together with lenders and their Business Development Management (BDM) teams day-to-day, they should also communicate with them when working towards their Consumer Duty requirements.
Working with lenders to better understand their products and intended target market will be essential going forward. Getting to grips with the benefits, prices and fees of each product or service offered by lenders will allow brokers to give clients comprehensive and tailored advice to suit each customer’s individual circumstances. Providing clients with a balanced picture of the market and helping them identify which products are right for them – something most brokers are already actively doing – will go a long way to demonstrating how they are complying with the Duty.
In the current market, with products being withdrawn or changed, brokers will need to maintain regular contact with lenders and their support teams. Keeping track of product and rate changes is a more challenging task, so making the most of telephone BDMs, monitoring for lenders' email and social media updates and using live chat tools are great ways for brokers to access information and updates quickly and easily.
Draw on lender resources
With lenders too needing to comply with the Consumer Duty and show how they are working in the best interests of the customer, lenders have produced their own guides and templates on how best to evidence meeting the new regulatory guidelines.
Lenders, including Coventry for intermediaries, have created Fair Value Templates which are specifically designed to help brokers check they are fulfilling their Consumer Duty obligations.
Additionally, some lenders have also produced guides to help brokers support different types of customers through the mortgage journey. For example, if brokers are looking for guidance on how to support customers with vulnerabilities, Coventry for intermediaries has a full guide with practical steps on how brokers can best communicate with these clients, and make sure information is clear and accessible before clients make any financial decisions. Using guides like this can complement brokers’ existing strategies by showing their commitment to helping clients through the mortgage journey.
The important thing for brokers is to demonstrate good practices which provide clients with comprehensive, tailored guidance to pursue their financial objectives. Brokers should capitalise on wide-ranging support from lenders, engaging with support teams where possible, to effectively evidence the great work they are doing.
[1]https://www.fca.org.uk/publications/multi-firm-reviews/consumer-duty-implementation-plans
