Lenders should turn to technology to stay on top of Consumer Duty

It’s safe to say that the last year has come with its fair share of challenges.

The end of Help to Buy, the fallout from September’s ‘mini budget’ and 13 consecutive interest rate rises has only increased pressure on mortgage affordability. The importance of protecting customers in this volatile landscape cannot be overstated, and the new Consumer Duty that has come into force today is the perfect opportunity for lenders to rise to the challenge.  

The cost-of-living crisis has already intensified lenders’ focus on customer outcomes, with increasing numbers of borrowers navigating sudden shifts in their finances, and in some cases finding themselves on the cusp of vulnerability. Thankfully, lenders have a wide range of technological capabilities at their disposal to support these vulnerable customers and comply with the Consumer Duty’s legal obligation to provide a tailored and comprehensive service to their customers.

Harnessing Consumer Duty requires a holistic approach

At first glance, it appears that the end goal of Consumer Duty is protecting the customer, plain and simple. While this is the Duty’s overarching objective, lenders must look at their entire business process, from start to finish, to consistently meet this goal. For instance, they should be open to rethinking and overhauling systems wherever necessary. Only by considering the customer’s entire relationship with the firm, can they then ensure that there is appropriate support at every step of the mortgage journey.  

Where to begin? Many lenders would have already put considerable work into actioning their implementation plans, but they should not become complacent now the deadline is here. For example, continually assessing how they onboard brokers is important in ensuring consistently good customer outcomes going forward. After all, it is the expert counsel of brokers that shapes the decisions the customers will ultimately make. As such, lenders must have the utmost confidence that they are partnering with brokers who have earned the right credentials and are positioned to issue effective and tailored advice to borrowers. In other words, the broker onboarding process must be as airtight as possible.

Technology is here to streamline broker onboarding

Onboarding can be complicated and time-consuming, but technology is here to do the heavy lifting. Through recent technological advances, lenders can leverage data and analytics with ease. In fact, with the right tools, they can obtain data in a cost-effective and timely fashion – often all within a single intuitive online interface.

Tech tools, such as finova’s Broker ID, are readily available to aid lenders in vetting advisers and verifying broker credentials before a single bit of business is written, including standard-issue due diligence checks and risk assessments.  

Additionally, tools like Broker ID can combine multiple data sources into a single source of truth, arming lenders with sharp insights into their brokers. The ability to access immediate data on authorised firms will not only fortify a lender’s vetting process – it will also save lenders valuable time and money, freeing up resources to be spent on helping customers receive the expert service they rightfully deserve.

Technology can also go a long way when it comes to nurturing broker relationships. By reducing the number of manual checks, lenders can proactively manage their panel and spend time cultivating broker relationships for the benefit of borrowers. On top of that, they can integrate annual broker compliance checks – making the most of the tech beyond the initial onboarding! Therefore, firms can monitor high-risk firms and receive quick notifications if a broker’s status or risk level changes.

The importance a long-term solution  

As the new Consumer Duty finally comes into effect today, lenders must maintain their new processes and reporting in line with the new regulation. Lenders may have taken many different routes to achieve early “compliance”, but effective long terms solutions aided by innovative technology ensures meeting these obligations is not only possible but – most importantly – being wholly centred on the customer.