With the 31st July deadline for the introduction of the FCA’s Consumer Duty rules fast approaching, Smart Money People has stressed that mortgage brokers regard clear communication and a flexible approach to affordability to be their most pressing issues with lenders.
In Q4 2022, Smart Money People surveyed brokers for the key areas they believe lenders need to focus on ahead of the Consumer Duty coming into force in order to ensure their clients are protected.
The leading broker theme for lenders to concentrate on was communication. Brokers stated they felt both themselves and their clients need to be kept up-to-date with responses offered in a timely manner, and many highlighted the use of jargon-free language.
This chimes with the findings from Smart Money People’s most recent Mortgage Lender Benchmark, which dissects the state of the mortgage industry according to the views of brokers.
It found that lenders miscommunicating changes in product offerings or rates, often giving less than 24 hours notice or sending messages outside of business hours, was a key concern for brokers. This has led to brokers and customers alike being unable to assess any impact or action changes, resulting in additional costs and time.
Meanwhile, 12% of brokers called for improvement in the clarity of the messaging asking lenders to ensure communication is clear, fair and not misleading as well as providing additional time to sufficiently understand the communications and make decisions.
After communication, the second most common theme was affordability with 17% of brokers stating the requirement for a flexible, understanding approach from lenders. While appreciating that lenders’ risk appetite differ, brokers believe that there needs to be some recognition that there can no longer be a ‘one size fits all’ approach to criteria, particularly in the current economic crisis.
Research from Smart Money People’s previous Benchmark report in H1 2022 found that with the economic challenges and the cost-of-living crisis, brokers believed cases of impaired credit were likely to become a more common situation.
As part of the new Consumer Duty, companies are required to assess and monitor whether they are delivering good outcomes to customers, with additional reporting required for their Board. As specialists in financial services consumer insight with over one million reviews captured, Smart Money People is helping companies with their Consumer Duty reporting requirements.
Jacqueline Dewey (pictured), CEO of Smart Money People, said: “Understanding brokers’ concerns with Consumer Duty is paramount as we fast approach the deadline. I can’t say we’re surprised to find that lender communication is the leading issue for brokers, as this was a key concern highlighted in our most recent Mortgage Lender Benchmark.
“We are helping firms deal with the new rules due to our experience and expertise in the consumer insight space.
“We have eight years’ worth of data asking customers whether they felt fairly treated, understood product details and thought products were good value for money.
“This means we have a wealth of historical data at our disposal to support companies to deliver good outcomes for their customers.
“Our service ensures companies are provided with an independent and impartial view of their performance using genuine customer data, which is an invaluable asset under the new Consumer Duty regime.”
