This morning, the Financial Conduct Authority (FCA) hosted a webinar entitled, ‘Consumer Duty Next Steps’, to provide feedback for financial advice firms.
The webinar revealed that over 70% of FCA-regulated firms feel confident with their Consumer Duty implementation.
Meanwhile, the FCA confirmed that mortgage advice firms offering “free services” are under review as to if they actually deliver “fair value” to consumers against fee-paying mortgage advice firms.
According to the financial watchdog, firms need to continue to focus heavily on their demonstration of Vulnerability Analysis of clients – as some firms have already fallen short.
Some regulated firms have centralised their systems to analyse vulnerability and ensure they have specialised and trained individuals to handle these consumers.
Throughout the webinar, the FCA also confirmed that Consumer Duty isn’t a one and done process – and demonstration of ongoing tweaking is expected.
Gary Bush, Financial Adviser at MortgageShop.com, said: “The FCA confirming how the financial advice community has fared so far, identifying areas of concern and areas where they are seeing good practice, is good feedback for this quite onerous new regulatory structure.
“To hear recognition from the UK financial regulator that free doesn’t always confirm the best cost is refreshing.
“On the whole most financial advice firms have taken Consumer Duty as an opportunity to revisit their consumer offerings for the better of all.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert, added: “As my company is a transparent, fee-charging company, it is encouraging to see the FCA reviewing companies that offer “free services” to see if they offer fair value for consumers compared to fee-charging firms, and I eagerly await the results of this review.
“It certainly looks like the FCA has some traction on this. I can only endorse what they are trying to do, as it will lead to better consumer outcomes.
“A lot of emphasis also seems to be on investment firms, and the FCA findings to date that they are falling short of their expectations.
“That 70% of FCA-regulated firms feel confident with their Consumer Duty implementation is self-reported information and may not reflect the reality of the situation, so these percentages could be skewed.”
Further reaction:
Joshua Gerstler, chartered financial planner and owner at The Orchard Practice:
“It’s great that the FCA realises that consumers need to be looked after.
“The majority of advisers will be doing this already. What is being done about the minority who flout the rules?”
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“It is commendable that the FCA is scrutinising firms offering ‘free services’.
“As a fee-charging firm, we can accommodate a restricted number of clients every month.
“This allows us to provide a service that aligns with the FCA’s Consumer Duty fair value and enables us to deliver an outstanding experience that is devoid of stress, hassle, and anxiety.
“We have done this even before Consumer Duty, and charging a fee enables our firm to do this.”
Justin Moy, managing director at EHF Mortgages:
“Those borrowers with closed mortgage lenders, typically badged as mortgage prisoners, will hopefully see some hard and fast action from the FCA to rectify their unfair situation.
“The focus on people seen as vulnerable, who are stuck on historically expensive products, will hopefully see a final solution to their problem.
“Those lenders need to take the amnesty on offer from the FCA.”
