Important Consumer Duty update for members

This update provides members with a summary of the current position on the work of the cross-sector working group which was formed to establish, in a non-competitive way, whether or not a common approach can be arrived at that could enable firms to demonstrate they are meeting the product disclosure and fair value requirements of the Consumer Duty vis a vis mortgage lenders and intermediaries.

The working group comprises representatives from four Trade Associations (AMI, BSA, IMLA and UKF) together with a small (but representative) selection of their members – see the Appendix for details of group membership.

Proposed deliverable(s) & timescales

The proposed deliverables are either a template (preferred) or a set of principles for use across the sector, capable of being adopted by lenders and intermediaries of all size and scale. Any output would be a living document, and one which will be adaptable for more complex products.

In terms of timescales, the working group has agreed to deliver the template/principles (being the key deliverable) by 16 December 2022, for wider consultation across the industry, with final sign-off and agreement in January 2023.

Current position

Approach: The ethos behind the group’s work is that any solution must be pragmatic and proportionate.

Template: The focus has been on development of a draft template, which all agreed would be likely to be of most practical use for both lenders and intermediaries. A draft has been produced, and is currently with members of the group for consideration and feedback, with a full discussion scheduled for Thursday 24^th.

Sourcing Systems: The Group is liaising with providers of the four main sourcing systems to ascertain whether or not there is potential for them to host any solution on their platforms. Early indications are that this is of interest, and discussions continue.

Other 3^rd Party Engagement: The FCA has been made aware that this work is ongoing, and will be provided with further detail once it is further advanced. Other trade bodies, such as the FLA and ERC have also been advised that the work is underway.

Further updates will be provided over the coming weeks.