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Nearly half of broker firms feel ‘somewhat’ prepared for Consumer Duty – poll results

  • 23/02/2023
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Nearly half of broker firms feel ‘somewhat’ prepared for Consumer Duty – poll results
Around half of mortgage broker firms said they were somewhat prepared for Consumer Duty and over a quarter said they did not feel prepared at all, a Mortgage Solutions poll has found.

Nearly half of respondents, around 46 per cent, said they felt somewhat prepared, but more work is needed.

Some 27 per cent of respondents said they were prepared for Consumer Duty, which was matched by those who said they were not prepared for the incoming rules.

Consumer Duty is the raft of new rules from the Financial Conduct Authority (FCA) which primarily focus on delivering good outcomes for retail customers of the financial sector. It comes into force from 31 July.

Earlier this week, executive director, consumers and competition at the FCA, Sheldon Mills, said many firms had made “excellent progress” but some were adopting an “avoidance tactic in the hope that it will go away”.

He urged firms to act now, and the deadline of 31 July would not be moved.


‘Concerning’ that many firms unprepared

Stacy Penn, senior policy adviser at Association of Mortgage Intermediaries (AMI), said with only five months until implementation on existing products and services it was “concerning” that more than a quarter felt unprepared for Consumer Duty.

She pointed to Mills’ speech, which said some firms were “prioritising work that is not the most important”.

Penn added: “The FCA will shortly issue a portfolio letter to mortgage intermediary firms highlighting key areas relevant to our sector, which should help bring focus.”

She said AMI’s view was that firms should “understand where there’s the greatest risk of poor consumer outcomes within their businesses and understand where they are furthest away from achieving the Consumer Duty requirements and plan their work accordingly”.

“Firms should also ensure they understand where and how they can utilise and build on existing frameworks and management information and, where there’s any areas they feel they already meet elements of the Consumer Duty requirements, be able to justify and evidence why they think this is the case,” Penn noted.

She continued that there was a lot of help and support out there and AMI member firms could access Consumer Duty factsheets. She encouraged brokers to speak to the team if they have questions.

Tony Crane, founder of Crane Consulting, said he was “not surprised” that nearly half of brokers said they were not fully prepared for Consumer Duty.

“The work is extensive and, not everyone is going to get this right first time. There are two areas that I think I’d be focusing on, firstly what is my advice proposition going to be – single point of sale only or point of sale plus ongoing servicing. The risks, responsibilities and how those impact the costs/commercials and Consumer Duty compliance are very different depending on which proposition is on offer.

“The second thing I’d put near the top of my ‘to-do’ list is making sure I’m prepared for the data transfer from the manufacturers at the end of April. The earlier the brokers engage with the manufacturers and understand what’s going to come across and how it will be transferred the better,” he noted.

TCF, MMR and other regulation put brokers in good stead

Nicholas Mendes, mortgage technical manager at John Charcol, said the results were “probably quite an accurate portrayal” of how brokerages were feeling currently.

He said at John Charcol they have been “reviewing every aspect of our business” and using it as an opportunity to see how it could improve internally, including client experience and interaction.

Mendes added that in recent months it had “taken extra care and diligence when it comes to spotting, supporting, communication vulnerable clients”.

“Speaking with other brokerages in the industry and smaller directly authorised firms, many are looking for support and guidance from AMI to understand more,” Mendes noted.

He said brokers would need to look at products and services, price and value, consumer understanding and consumer support.

Greg Cunnington, chief operating officer at LDN Finance, agreed with the poll result, saying it was “not a surprise”.

“I think we are lucky in our industry compared to a lot of other financial services arms that we speak to in that Treating Customers Fairly, Mortgage Market Review and the high levels of regulation and quality standards we hold ourselves to means that the ethos of Consumer Duty is fairly well embedded already,” he added.

Cunnington continued: “I think the client being at the heart of all we do is already the case for most intermediaries. I think the main frustration is not knowing exactly what is required in terms of plans, paperwork and recording from an intermediary perspective.

“Some more clarity here would be great, and AMI are doing a great job in helping to try and clarify things here, but in the main we feel positive about the aims of Consumer Duty and as well prepared as can be.”


Data and evidencing will be vital

Iain Swatton, head of intermediaries at, said Consumer Duty was “ starting to climb higher on the broker agenda” but many were “still unsure of their responsibilities”.

“To be Consumer Duty ready, and improve on the existing level of consumer protection, brokers must be armed with high-level data and insight on their clients. This insight is an enabler, allowing brokers to help clients make informed decisions by giving them choices that lead to better long-term outcomes,” he added.

Swatton said this was “particularly relevant” as rising interest rates and changing mortgages and give the client “certainty of knowing how much their future payments are and when would be the right time to switch from their current product”.

Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said the regulation was a “huge shift” and evidencing would be crucial.

“Even if you feel you do a great job for your customers the question is: prove it. It’s no good saying you’re brilliant and offer great value, you have to be able to demonstrate how you deliver that time and time again.

“There’s lots of great support in the market from the various networks, mortgage clubs and trade bodies – the Consumer Duty fact sheets from the AMI are an excellent resource if you are a member,” he added.

Steven Morris, advising director at Advantage Financial Solutions, added that providing good customer service and advice was about “treating a client’s quandary as if it were your own”.

“For your own mortgage, you would turn over every rock, consider every alternative and associated issue. Boiled down, that’s all it is and rightly so,” he noted.

Morris said the key was how to evidence the “process of elimination for every feature of the advice process and doing so efficiently”.

He said the firm was using a suitability letter for a lot of its business and agreed strategies were “front and centre for us, the client and regulator”.

“I have seen mortgage brokers on forums saying things like ‘I don’t really get what it has to do with mortgages, I think it has more to do with investments’. Then I flick a little elastic band against my wrist before I start twitching again,” Morris added.

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