The firm, Forbes Securities, has implemented the MorganAsh Resilience System (MARS) to assess and manage customer vulnerability. It has also mandated all its clients should complete an assessment.
Every client is expected to complete an online questionnaire which has been developed by MorganAsh. For those unable to do so, advisers will fill the questionnaire on their behalf.
Last month, the Financial Conduct Authority (FCA) wrote a ‘Dear CEO’ letter to the insurance market with its observations and expectations. It warned that it identified signs of “weak identification of vulnerable customers” in the last year.
Vulnerability will be ‘main thrust’ of Consumer Duty
Mike Kellett, owner and director of Forbes Securities, has been a directly authorised mortgage broker since 2003.
He said: “Personally, I believe that the main thrust of Consumer Duty obligations for mortgage brokers will be client vulnerability monitoring – to identify and track foreseeable harms. If protections for life and income are not put in place at inception, and properly tracked to completion, then – in the event of death, illness or disability – the property could be repossessed. This is a major foreseeable – and preventable – harm. The FCA, Financial Ombudsman (FOS) and indeed claims lawyers will certainly take this on in the event of a claim – and I don’t see any defence for it now Consumer Duty is in place.”
Kellett said the MARS reports provided “valuable live data” on whether a client would get health-rated for life or permanent health insurance. It also tracks vulnerability during the conveyancing process.
He added: “Health-rated life premiums will generate increased commissions for the broker, and – once accepted by the client – will very rarely lapse. Of course, this Consumer Duty obligation has then been fulfilled.
“Once reporting starts, any broker who cannot make a declaration based on evidenced management information on Consumer Duty obligations, in a ‘timely manner’ will fall foul of the FCA’s rules, which may endanger their regulatory status to continue trading.”
Andrew Gething (pictured), managing director of MorganAsh, added: “As per the recent ‘Dear CEO’ letter, the FCA is highlighting weak identification of vulnerable customers and the need for good reporting, as Consumer Duty requires firms to consider outcomes for different groups of customers. While most firms have taken a softly-softly approach to vulnerability, it’s great to see an example of a proactive firm rising to the challenge.
“Many within financial services have a fear that asking personal questions on health and lifestyle will be a turn-off for clients, but this is not the case in practice. Indeed, many people are far more comfortable talking about health and lifestyle than money matters. Within the MARS platform, we give several options on how data can be collected, giving flexibility to accommodate individuals and different processes. There are even options on the types of questions to be included.”
