The Equity Release Council, the representative body for the equity release sector, has published guidance to support its members in complying with the Financial Conduct Authority’s forthcoming Consumer Duty.
The Council’s guidance is aimed at manufacturer and distributor firms and covers fair value, one of the most important areas of the Duty for the mortgage industry, including the equity release sector.
The guidance is made up of three sections: Introduction to a fair value assessment, completing a fair value assessment, and governing a fair value assessment. It was informed by workshops attended by the Council’s members and produced with the support of a global advisory firm.
Firms will need to build on this guidance and develop their own bespoke procedures in response to the Duty. Each firm will also be required to appoint a Consumer Duty champion.
Kelly Melville-Kelly, head of risk, policy and compliance at the Council, said: “The FCA has said price and value is one of the core elements of the Duty across financial services, so it’s no wonder it has generated the most enquires from our members.
“Firms need to ensure the price a customer pays for a product or service is reasonable, compared to the benefits they will receive.
“Our members pledge to go beyond statutory duty when they join the Council and promise to abide by its consumer focused safeguards.
“These safeguards have already moved to a principles and outcomes based approach. However, the Duty will still require a cultural shift for many firms.
“Our guidance is thorough, and we make no apologies for that because there is no one-size-fits-all solution to the Duty. Each firm will have to devise its own bespoke procedures.
“Firms will need to build on this guidance and think critically about their own processes and templates, based on their product, business models and internal governance.
“We’ve already seen a lot of great work from our members ahead of the first milestone and we’re looking forward to helping them continue to rise to the challenge.
“The rules require each firm to appoint a Consumer Duty champion, but we want to see our members embed the new processes across their entire business.”
