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How is the mortgage sector coping with new Consumer Duty regs?

Journalist: Emma Simon, Mortgage Strategy

ended 22. August 2023

I'm putting together a feature for Mortgage Strategy, looking at how the new Consumer Duty regulations are bedding in. Interested to get views on the following: 

  1. What do you think are the most important aspects of the new consumer duty regulations, particularly in relation to the mortgage market? 
  2. Do you think this is the biggest regulatory challenge the industry has faced in recent years?
  3. How difficult has it been for brokers — and for lenders — to meet these new requirements?
  4. How do you think the new regime is bedding in — have there been any particular teething problems, or issues with firms not meeting these new standards? 
  5. Has the industry been given sufficient time to prepare? Has there been enough guidance from regulators or mortgage networks, clubs etc?
  6. What are the longer-term challenges? I’ve seen a number of commentators say this isn’t a ‘one and done’ initiative but will require considerable ongoing work in the months and years ahead to ensure continued compliance. Do you see any potential problems ahead, where are they likely to be? 
  7. Will this lead to greater automation of the broking / lending sector? How important is tech in ensuring better customer outcomes? 

Any other comments/ observations gratefully received. 

Looking to collate comments by 23rd August. 

 

Many thanks

 

Emma Simon

 



 



 



 

9 responses from the Newspage community

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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Literally no change to our business at all. We were already all about putting the clients first as are all decent mortgage brokers across the UK and our fees for our services were already very reasonable and fair value. So aside from some network training modules on the subject this is just business as usual. Those brokers who have been charging over £2,000+ broker fees and praying on desperate clients will be the only ones impacted and thats a good thing for consumers and the industry.

I think as the market gets more and more complex professional advice from an expert becomes priceless and automated systems just won’t be able to place the same cases that hinge on specialist criteria bdm conversations and underwriting exceptions. I believe most borrowers would rather trust a human expert on such a major financial decision.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
We are professional landlords and developers that utilise mortgages and commercial finance all the time so consumer duty is important to us. Consumer Duty will mark an important milestone in the day-to-day operations of most FS businesses. While there are no specific directives for residential landlord companies (we are already heavily regulated), our focus continues to be prioritising and protecting the well-being of our tenants above all else. At long last, the FCA has woken up to the fact that ensuring transparency, fairness, and accessibility of services is paramount to this country's success in Financial Services, which is one of our biggest export industries.

However be under no illusion that Consumer Duty will place additional legal obligations on businesses, increasing compliance costs and administrative burdens. Small and medium-sized businesses, in particular, will struggle to keep up with the regulatory requirements, diverting resources away from innovation and growth.
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Mike Staton
Director at Staton Mortgages
I'll be honest, our network has gone into complete meltdown, making rushed compliance changes and leaving brokers feeling uninformed and penalized unfairly. This is completely unacceptable as we are dealing with people's lives here. Luckily, our goal has always been to have a fair outcome for our clients so it hasn't changed the way we work, we just feel that we are now competing against our Network which doesn't seem to be applying common sense to cases.
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Darryl Dhoffer
Founder at The Mortgage Geezer
As a Directly Authorised Mortgage Advice firm, we already implement Consumer Duty requirements, into our communications and working platforms, and I believe our only "tweak" is extra vigilance on "vulnerable" clients, and how we identify and document our discussions and information gathered on these clients, and our assessment for advice, not just from outset but ongoing.
I certainly believe Consumer Duty will have more emphasis on lender outcomes, with much more exposure to transparency from lenders, fee structures for lenders will also need to be observed and tracked, ensuring fair pricing for clients, and clear easily signposted lender channels for appeals or complaints, also need to be addressed under Consumer Duty in my opinion. If you are a broker that puts the client at the heart of your advice at all times, then Consumer Duty I believe already forms part of your ongoing remit - however, I believe this will be a longer process for lenders to integrate uniformly
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Consumer Duty is a massive, fundamental change to the financial world in the UK. The key point to remember is that isn't aimed specifically at mortgage brokers, we are way down the list of areas of concern for the FCA, so the overall impact on us is not a total sea-change in our day-to-day operations. The key areas that we do need to pay very careful attention to is around fair value; does the fee we charge represent good value for the service we deliver to the client, what is the stated service we give as part of that fee and how do we ensure that service is delivered and the fee is fairly charged across all clients and business we transact - in particular vulnerable, or potentially vulnerable clients? The other change is around documentation; the Duty requires us to be much more diligent in recording conversations and actions; for many firms, this won't be a huge change from what they already do, for others, it could seem like a massive culture shift.
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Austyn Johnson
Founder at Mortgages For Actors
The thing is... You shouldnt need to make too many changes if this was your work ethic anyway. Never treat clients as numbers, always give them the time of day, the extra help they need and just do the best job you can with them every single time. From now though, record it!
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James Bull
Mortgage Broker at JB Mortgages
At JB mortgages our compliance is dealt with by TMG Direct network, and they have been very proactive in getting ready for consumer duty. There has been a lot of work behind the scenes with our software provider OMS in making the system changes needed to be compliant with the new regulations. We have also attended a number of workshops to get our business up to speed. The biggest change as an adviser will be the foreseeable harm element and how this relates to protection advice. At JB mortgages we are in favour of this regulation as it will increase standards in the industry and provide a better outcome for clients.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
I'll throw this out there but we've actually seen next to no impact on our day-to-day business. We've always been a business that's valued service, reviews and doing right by our clients over squeezing every last penny from a transaction so no change here. My question to anyone who it's been a nightmarish transition for would be why weren't they following the principles that consumer duty has merely formalised before?
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Christian Duncan
Managing Director at Manchester Mortgage Centre
I think the introduction of consumer duty is fantastic!! Ensuring all customers are treated fairly and consistently is something that should have been happening for a long time but unfortuntaley this hasn't always been the case.

I do believe this is one of the biggest regulatory changes since the introduction of CeMAP and having to be "qualified" to give mortgage advice. The industry is gearing up to ensure advisers, brokers and business owners are all responsible which can only be a good thing.

I am part of The Money Group Mortgage Network and we have been gearing up for this in colabiration with OMS (One Mortgage System) since early 2023. This has resulted in a relatively smooth transition to becoming compliant and embracing consumer duty.

I dont believe consumer duty will lead to greater automation but it will ensure the advice and process clients go through will be more uniform to ensure greater client outcomes are met in 2023 and beyond.