Everything brokers need to know ahead of the new Consumer Duty
While the majority of brokers endeavour to deliver the right products to their clients at all times, the FCA is concerned that not all financial services work well.
As a result, the regulator is ramping up its attention on consumer facing advice; but with all the changing rules and regulations, it can feel like minefield for brokers to guarantee they are acting in compliance with the rules.
In this blog, Melanie Spencer, Head of finova Payment & Mortgage Services, outlines her top five tips for brokers to ensure they are acting safely and compliantly when the new Consumer Duty is officially implemented in April 2023.
1. Evaluate the rules against your business
Despite the implementation deadline only being in April, brokers should already have plans in place to ensure their business meets the FCA’s expectations. Since the Duty is predominantly focused on ensuring good consumer outcomes, most brokers will already be acting largely in line with these, but it is very important that brokers review each element of their business to ensure nothing can slip through the cracks.
Key guidelines include:
- Products and services: All products and services must be fit for purpose, and be designed to meet consumers’ needs
- Price and value: All consumers must receive fair value for services, products and fees. Firms must obtain information on the benefits and overall costs from the manufacturer, as well as confirmation that the benefits of a product are proportionate to the fees. For customers struggling or if situations change, brokers should ensure it is as easy for customers to switch or cancel a product as it was to take it out in the first place
- Consumer understanding: Information should be provided to allow customers to make good financial decisions, and communications must support and enable this by presenting materials in a clear format, rather than buried in lengthy, jargon-heavy documents
- Consumer support: Firms must provide a level of support that meets consumers’ needs throughout their relationship with the firm. This includes providing regular contact with clients, which can be accessed in a timely manner
2. Lean on technology
While many brokers will need to up to ante when it comes to communication to meet the new requirements, this doesn’t mean they will need to increase their workload. Brokers can benefit from sophisticated technology to offer the enhanced level of service required, for example by automating emails to help brokers keep in regular contact throughout a client’s entire mortgage journey and ensure they are sourcing the necessary information to help clients access the right product, without taking up any additional time.
Furthermore, finova offers additional API-integrated services and tools, brokers can also provide quotes for protection, conveyancing or general insurance quotes through the same platform. This way brokers can ensure they are offering a full-service, with products designed to suit their customers’ needs, without much additional research.
3. Advising on protection is vital to providing complete support for clients
To ensure that clients receive proper support, brokers must ensure they have frank and open conversations with their customers on their different needs, including the need for protection. For instance, some clients may not have life insurance, or they may have a plan which does not meet all their needs.
Brokers must take stock to evaluate whether their customers are receiving adequate protection and whether they may need to consider upgrading to a more extensive plan.
By keeping in regular contact with customers over time, brokers can improve their understanding of each client’s needs and ensure that clients are covered even if their situation changes.
4. Finding the right mortgage club is essential
For brokers to meet the FCA’s requirement of providing fit-for-service products, working with the right club is essential. A mortgage club will provide advisers with access to products, often exclusively, to ensure the broker has all the necessary tools to support their clients in finding the best deals.
Good mortgage clubs will go above and beyond to support their members in this way, especially as the current market volatility may be stretching many clients’ finances, making it even harder for a broker to find the perfect product.
In addition to the 80 lenders on our panel, finova Payment and Mortgage Services recently partnered with Manor Mortgages to allow brokers to outsource more challenging cases, expanding the range of lending options available and freeing up broker capacity to help even more people find the right mortgage product in today’s challenging climate.
It is vital for brokers to regularly assess whether their current club is supporting them to, in turn, better support their clients; and to make sure the club is adapting with the times to avoid being left behind. For instance, brokers should take time to consider if the club offers a suitable protection panel as well as a mortgage panel, or if it provides market-leading technology to help streamline processes, allowing more time to be spent ensuring clients are properly serviced.
5. Using tools to ensure all clients receive fair and equal treatment
For many clients, purchasing an insurance or mortgage product is the most expensive financial decision they will ever make. During a time of increased financial vulnerability, the Consumer Duty changes are acutely focused on ensuring a high standard of customer service.
To ensure that brokers provide fair treatment for all customers, they should take measures to understand the needs of all customers, including developing accessible communication plans to suit clients no matter their level of vulnerability. Having simple measures, such as a technology platform which allows brokers to log clients preferred contact method and automate contact points accordingly, ensures that all clients receive a tailored service to experience the best outcome for them.
If you want to hear more about how the changes may impact your business, and how finova Payment and Mortgage Services can support you, please contact firstname.lastname@example.org