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The main focus of this month’s Connect is the FCA’s new rules around Consumer Duty.  Firms should be in no doubt that this will require a serious investment of time and effort to meet the new requirements.  Firms of all sizes will have to review their policies, procedures and processes to document and measure how they ensure that their customers get good outcomes.  They will also have to establish where they are most likely to fall short and change the way they do business where this happens regularly.  We will be providing lots of help and support in the coming months, but please take time now to plan in the fact that you will have to sort out your own structures ahead of April 2023 and then absorb the information coming from lenders as we go through quarter two.

In the last few weeks, we have seen lenders withdraw products too quickly for most brokers to get the applications they were planning into the pipeline.  Whilst I understand the pressures on lenders’ funding and swap rate turmoil as well as their administration and processing positions, this has left brokers at breaking point.  We cannot turn the clock back, but we need to learn and lenders need to find a better way of turning their tap on and off.  Some grown up discussions need to be had once the dust settles.

In other news, despite the tax breaks being visited on the UK economy by the revamped government, household budgets now look as though they will be even more stretched.  Whilst the capping of energy unit costs is positive, a doubled bill still looms.  With mortgage costs also escalating and food inflation rampant, people will have to make some difficult choices.  Lenders have been encouraged for months now to build their capacity to deal with those in financial difficulty.  Whist we will not see the mass payment deferral schemes of Covid, it is clear that for those in most difficulty there will be options. 

It is important that we encourage consumers to seek advice and help.  Lenders will look at term extensions, interest only and in exceptional cases payment deferral where it is the best option.  Taking possession will be the last resort and usually only where the customer does not communicate with honesty.  Insurers are being told to help consumers keep their protection policies of all types.  This will be a tough winter for many and it is our responsibility to give solid advice without hype or drama.  Mortgage products will be available, but at higher prices.  Affordability will be stretched in a way not seen for almost twenty years.  It is our duty to help the consumer navigate the choppy waters.  I am confident we are up to the challenge.