Niamh Byrne, head of mortgages at Financial Advice Centre, said Consumer Duty was welcomed. She said each touchpoint of the firm’s advice and application process already ensured “consistency and transparency”, so the new rules gave them “more impetus” to look beyond how they interacted with clients.
Byrne added: “We are laser focussed to ensure our clients understand the products and services at hand, whilst delivering positive outcomes.”
She said the mortgage sector had been fast paced for several months now, adding: “Brokers are accustomed to the speed in which applications must be processed to lock in the best rates.”
“Consumer Duty regulation has been embedded within our firm during this period, and our brokers have not had to compromise on client understanding vs speed. With slick procedures, organised, client focussed brokers and effective prioritisation, we have no reason to fall short on any Consumer Duty outcomes and it is imperative this does not happen,” Byrne said.
Darryl Dhoffer, mortgage and protection consultant at the Mortgage Expert, said his firm had already been providing advice in a way that covered the requirements of Consumer Duty.
He added: “We already undertake our required due diligence, all correspondence documented, making sure clients are aware at all stages.”
Richard Campo, owner of Rose Capital Partners, said: “I can’t see how Consumer Duty will have any practical impact on timeframes of obtaining a mortgage. Rightly, the emphasis is on clients truly understanding the product they are being recommended, and why.”
He said his company had placed a greater emphasis on transparency since the pandemic started, and the majority of his client meetings were now done using video calls.
Campo added that due to recent market uncertainty, he had taken to “sharing my screen and talking over recent money market data. I overlay that against lenders’ product offerings, so we can try and navigate to the best value product”.
“We also keep our monthly mortgage market updates on our website for this very reason so they can be shared on screen or as a follow-up if needed with clients,” he said.
Unhelpful sudden changes
Brokers noted that while things would not change on their end, the process would be made easier if lenders did not make sudden product withdrawals and changes.
Byrne said she remained “hopeful” that Consumer Duty would cause lenders to allow brokers more time before changes are made.
She added: “It is vital that lenders and brokers work together to achieve the best outcomes for our clients, and in the spirit of Consumer Duty believe lenders should have this issue high on their agenda.”
Dhoffer agreed and said the new rules were not just about making sure clients understood products and fee structures, but why changes happened. He said lenders’ current reasoning of ‘sorry, we had to withdraw the rate’ would “not cut it in the Consumer Duty world”.
He said: “At the minute ‘speed’ is a loose term bandied around the mortgage world, where mistakes can happen, and due diligence and care can be rushed. We are all up against it – clients, brokers and lenders alike.”
Dhoffer said lenders should agree on a standard 24 to 48-hour notice period before changing or withdrawing rates, so clients would have sufficient time to make the right decision.
He added: “Speed – in my opinion – is not helping this process for us all. We are not buying a product from Ebay, where speed is the essence for that last bid – clients are making long-term financial decisions, that need time to make the right decision, as could cost them hundreds if not thousands of pounds.”
Dhoffer said lenders needed to take this “very, very seriously”, as it required extra administrative work for brokers. He said this was fine for advisers to do but urged lenders to be more transparent about the reasons why this happened “particularly if there is a monetary value associated”.
What will change
Mortgage brokers named the parts of the mortgage advice process which would be changing to align with Consumer Duty.
Dhoffer said his firm was “tweaking” the explanation of broker fees and how they are remunerated by a lender to make it more in depth.
He also said where this information was available on websites, he would include the Consumer Duty responsibilities of a lender as part of the advice given.
Campo said amendments had been made to the recommendations letter issued to clients so that a child between the ages of eight or 10 could understand it.
He added: “I tried my 10-year-old on this a while back and it would be safe to say that aspect still requires work. As that is the record of our advice, that can be done post-submission.”
Rose Capital Partners also carries out annual reviews with clients to make sure they are okay, understand the product or have any questions. Campo said his network Primis had “very high standards” which gave him the confidence to know his firm was on the right track.
