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Closed book deadline will be a ‘game-changer’, says Consumer Duty Alliance head

  • 21/03/2024
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Closed book deadline will be a ‘game-changer’, says Consumer Duty Alliance head
The closed book deadline for Consumer Duty will result in changes for both distributors and manufacturers, said Keith Richards, CEO of Consumer Duty Alliance.

Speaking at an Air round table about comprehensive advice conversations in the later life sector, Richards said the Consumer Duty regulation presented an opportunity to “create an environment with greater trust”. 

He said this was one of the key objectives behind the rules. 

Richards added that the closed book deadline of 31 July would be a “game-changer” that would impact distributors as well as manufacturers, as they would have to start thinking differently about their legacy back books. 

The panel was asked if this could result in lenders updating product expiry communications to inform borrowers of options they did not offer, such as a lifetime mortgage or newer equity release product features. 

Richards said banks would be under pressure where they had “relied on customers’ lack of understanding or awareness of new products, better rates or terms”.

He added: “It’s now going to be on them to make those customers aware of those terms. Otherwise [banks are] knowingly disadvantaging [borrowers].” 


Reconsideration for SVRs

Will Hale, CEO of Key, said one area of lending that had not got as much attention as it should have was the standard variable rates (SVRs) offered by mainstream mortgage providers. 

He said this represented a great opportunity for intermediaries. 

“When you look at mainstream mortgage rates on two- or five-year fixed deals, they do look relatively competitive compared to lifetime mortgages. When you look at SVRs, they don’t look out of line, and many lifetime mortgage rates are far lower. 

“All of those older customers who are stuck on SVRs with mainstream lenders should be encouraged to shop around and see what other options are available for them. I’m sure intermediaries will be happy to have those conversations to try and find them better solutions.” 

Hale said the banks did not want to give these customers up for obvious reasons, but this was what Consumer Duty was trying to address. 

Ben Waugh, managing director of More2life, said: “We are doing and have already done a lot of work on the back book reviews under Consumer Duty for the closed book. It’s been a really good, interesting exercise to look at loans that we might have originated 10 or 11 years ago and compare them to the modern features that you’d expect on a product today. 

“We are making changes to the terms and conditions we’re applying to some of those old products to better ensure that the likely current needs of those customers are able to be served.” 

“I would say, we are doing exactly what the FCA [Financial Conduct Authority] hoped we would do which is… don’t just forget about them because there are customers at the end of that. We need to change and adapt, we will do, and that is exactly what we are doing,” Waugh added. 

More2life announced this week that it would stop distributing through firms that do not comply with Consumer Duty.

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