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Is lenders selling their own products compliant with Consumer Duty?

ended 20. August 2024

Is lenders selling their own products in today’s market in the spirit of, or even compliant with, Consumer Duty? Are polarised advice and dual pricing still a valid option or should the regulator prevent lenders from advising clients directly and only enable independent brokers to provide advice? Can a lender selling its own range of products have any role in a world where best advice must come from a multi-channel offering? Any thoughts, send them across.

5 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
In a financial world of huge choice and breadth of propositions, I find it staggering that lenders are still able to provide advice only from their narrow range of products. How can any resemblance of good advice be provided in this way, when channels such as mortgage brokers have that 'whole market' opportunity? Consumer Duty should surely be focused on ensuring borrowers have had the best products from the mortgage market, based on their individual circumstances, and we know that no one lender can appeal to all types of borrower, so how can this be a viable option still? I think it is time lenders concentrated on designing the products, and let the experience of the mortgage brokers be the best judge of meeting borrower needs.
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Mark Eaton
COO at April Mortgages
As a lender, we’re big believers in the value of holistic advice, with independent brokers being key players in that process. Consumer Duty is all about putting the borrower first, and that’s more likely to happen when expert advice is involved. The lending industry needs to shift from a product-focused mindset to one where independent brokers, who really get the borrower’s unique situation, can make the right recommendations. When brokers and lenders work together, we can make sure the borrower’s needs always come first.
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Michelle Lawson
Director at Lawson Financial
Not every peg is round. Most lenders stopped giving advice a while ago and purely offer a non-advised service on a very limited range of products, policy and criteria. On top of this consumers are at the mercy of the lenders with lengthy appointments where advice is given and often a long wait to get to speak to someone. The big question is whether consumers fully understand this and the implications? On top of this, if lenders can't help the borrower, where do they sign-post them to or do they send them off on their merry way thinking that they can't get a mortgage full stop? Consumer Duty is there to ensure borrowers are directed to the best outcome for them. There are a lot of square pegs so where do they go?
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Patricia McGirr
Founder at Repossession Rescue Network
Lenders’ self-serving tactics violate Consumer Duty and undermine trust. Offering borrowers better deals directly than through brokers exposes a blatant conflict of interest and smacks of profit margins over client choice. This lack of impartiality flies in the face of FCA Consumer Duty. Lenders pushing their own products can't provide the unbiased advice consumers deserve. This not only harms borrowers but also marginalises independent brokers, who are best equipped to offer true, multi-channel options. The FCA must act to prevent lenders from advising directly, ensuring consumers receive genuinely impartial guidance and restoring trust in financial advice. To do nothing is to potentially return to the mortgage mis-selling scandals of the past and trap unsuspecting borrowers in inappropriate products.
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Hannah Bashford
Director at Model Financial Solutions
Consumer duty is concerned with advice and the best outcomes for clients, and lenders selling their own products is exactly that- selling. They are not advising in the true sense of the word as they are ignoring all other options available to the client and therefore they are not necessarily providing the best outcomes for the client and therefore they are failing in the spirit of consumer duty.