Key Consumer Duty developments and recent communications issued by both AMI and the FCA, with commentary on implications for mortgage intermediary firms…
It looks like the arrival of more lenders paying for product transfers combined with rising interest rates has energised the market. It is now an easier discussion in a low interest rate world for the broker where “charging a fee” to leave the customer “where they were” was challenging. Although there is often less money on the table from the existing lender than a remortgage, this must not mean that the broker needs to do less work.
Advisers need to ensure they have done and recorded the same work on a product transfer as they would for a remortgage to another lender. They need to have had the same detailed discussions with the customer to deliver their advice, complete the “application” and justify their procuration fee. Anything less will not stand up to scrutiny by our regulator or the lender.
Linked to this is the need for all firms and advisers to address the requirements under the new General Data Protection Regulations. All firms irrespective of size, sole traders included, need to ensure they have a data policy. This will include how they collect, store, manage, transmit and use data on their customers. All firms will need to gather express consent from their customers to hold data with permission to pass this to third parties including making lender applications. Lenders will be making their own decisions and arrangements on how they deal with data.
Firms should expect their lender partners to clarify that they have appropriate ICO registration and agree how data will be transmitted. Lenders will be looking to get this established before April 2018, although the primary legislation for this new regulation is still passing through Parliament. Brokers will need to establish new authorities with their client bank to allow the marketing of ongoing services and advice.
Finally, we are being challenged by HMRC to assist them with documentation required to prove income. Traditionally this has been satisfied for many by the use of a SA302. We have moved to the point where the Revenue will no longer issue paper copies and lenders have been asked through their trade bodies to accept online versions of the Tax Calculation and Tax Year Overview, including those provided by commercial self-assessment software. The last four years of these are routinely available online for most tax payers.
Both lenders and brokers have access to guidance documents on how to assist customers obtain their information online and to assist lenders in ensuring authenticity. Should any lender be insisting on a traditional SA302, they are in breach of HMRC guidance.