This week the Financial Conduct Authority (FCA) issued a "Dear CEO" letter to Mortgage Intermediaries, warning them that their current policies may be inadequate to comply with the new Consumer Duty Policy.
The Financial Conduct Authority (FCA) has highlighted concerns over some mortgage intermediaries' readiness for the Consumer Duty Policy, coming into force at the end of July and provided further guidance on areas brokers should focus on.
In a letter addressed to mortgage intermediaries, FCA Director of Consumer Finance, Roma Pearson, stated that most firms they have reviewed had shown an understanding of the Consumer Duty, but some firms were over-confident and risked not being ready in time.
The duty applies to all financial service firms that provide a product or service to retail customers and those that materially influence customer outcomes.
Pearson identified three key areas for firms to focus on before the end of July:
- Effective prioritisation: The FCA said firms should make sure they are prioritising the implementation work appropriately and focus on reducing the risk of poor consumer outcomes in the areas where they are likely to be furthest away from the requirements of the duty.
- Embedding the substantive requirements: The FCA noted that some firms are “over-confident” that their existing processes are adequate and urged them to carefully consider the requirements to allow them to identify the necessary changes.
- Working with other firms: The FCA said many firms will need to work and share information with other firms in the distribution chain and noted that some firms may need to accelerate this step.
The letter also outlined examples of products and services firms should consider, such as unsuitable advice and lifetime mortgages.
FourthLine is hosting a new Consumer Duty webinar in conjunction with the FCA on the 9th of March. Find out more or register for the event here>
Here's the FCA's full timeline toward full Consumer Duty Compliance:
