UK Finance’s new guidance – Customer vulnerability disclosures: Principles for information sharing between mortgage intermediary firms and lenders – is a voluntary principles-based framework specifically for mortgages.

It was designed in association with members and the Association of Mortgage Intermediaries (AMI), the Building Societies Association (BSA) and the Intermediary Mortgage Lenders Association (IMLA).

It’s meant to help brokers by providing a framework for supporting customers to disclose their needs and circumstances in a way which meets the regulator’s expectations.

The guidance sets out that:

• Lenders need to make brokers aware of their expectations of what vulnerability information should be disclosed, when and how to do it.
• Responsibility to declare customer vulnerability to the lender during the mortgage application journey will sit with brokers until completion, when it moves to the lender.
• Brokers should obtain consent from their customer to share vulnerability information with the lender and tell them that their personal data will be collected and stored in line with Data Protection principles.

You might be wondering if more guidance was needed. The latest guidance came off the back of a survey conducted with brokers by Smart Money People and Newcastle for Intermediaries, to get an insight into how you are currently disclosing client vulnerabilities. And it threw up some fascinating but concerning insights.

Called Understanding and disclosing vulnerability: A broker’s perspective, the survey revealed that over a fifth of brokers say they need more training on what is meant by a vulnerable customer.

Four in 10 said brokers said they do not share any information about identified vulnerabilities.

And two-thirds (66.5%) of brokers reported that the lack of clear processes for disclosure from lenders is a major reason why they do not disclose customer vulnerabilities.

These survey responses revealed an urgent need for improved clarity and access in disclosure protocols, which lead directly to the new UK Finance Guidance.

Halifax Intermediaries and other intermediary brands within Lloyds Banking Group have responded to the UK Finance guidance by enhancing our route to disclose vulnerability information for mortgage brokers.

We’ve made it as easy as possible for you to tell us if you spot a characteristic of vulnerability in your clients.

We now have two options:

1. If you spot characteristics of vulnerability or additional requirements, call Halifax Intermediaries on 0345 030 6253 and run through your findings with us in the usual way, after discussing it and getting consent from your client.
2. If you identify an additional support need and your client would appreciate talking to one of our trained colleagues about it for help and advice, call us on call us on 0800 0854 475.

We want to support you to help vulnerable customers, following the UK Finance guidelines and the broker survey. We’ve added our second option to make the disclosure process as easy as possible and take some of the pressure off brokers.

You will have still met your regulatory requirements by using this option, but we recognise that these conversations can be difficult and you are not expected to be experts in managing every type of vulnerability. If you’d prefer our trained colleagues to deal directly with the client to help them, we can take over the conversation.

1. Understand your obligations under the FCA. You can learn more about this by reading the latest Guidance for firms on the fair treatment of vulnerable customers and by understanding your responsibilities under the Consumer Duty, which also states that you need processes in place to support customers with characteristics of vulnerability .
2. Read our recent article, An intermediary’s guide to understanding client vulnerability, which runs through the different types of vulnerability as defined by the regulator and how you can put processes in place to identify them.
3. Check out the new UK Finance principles for disclosing client vulnerability to lenders. They are brief, useful and designed to help brokers, not to add further rules and responsibilities.
4. Contact us if you have questions about our route to disclose client vulnerability information. We hope we’ve made our new route to disclose as clear and easy as possible, but we’re here to help if you have further questions. Speak to your BDM or call us on 0345 030 6253 if you need help.

For the use of mortgage intermediaries and other professionals only

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