Upcoming Webinar: what is a green mortgage?

The Green Mortgage Advice Initiative (GMAI) brings you a new webinar: What is a green mortgage. The event takes place on Monday 29th July…

Important fee changes for mortgage intermediary firms in 2024/25

The FCA has released its policy statement on the Fees & Levies payable by regulated firms for 2024/25 – we pull out the important fee changes…

AMI secures significant win for the protection industry

We are delighted that the FCA has accepted our argument that the protection industry should be out of scope of the Advice Guidance Boundary Review…

Mortgage Vision returns for 2024 with extra locations

This year’s Mortgage Vision events take place across the country in September and October, with some new locations added for 2024…

AMI Consumer Duty Factsheets update

Regulated firms are required to bring any closed products and services they continue to offer into the scope of Consumer Duty by 31 July 2024…

Your June ’24 update from AMI Chief Executive Robert Sinclair

AMI Chief Executive Robert Sinclair gives his June update in what has been a quiet month for the industry with the upcoming general election…

Edit Content

Log in here for full access to all our great content

 

Please log in below with your username (which is your email address), using all lower-case letters.

 

Forgotten your password?
No problem, simply tell us you have forgotten your password to receive instructions instantly via email.

Having problems logging in?
If you are a current member but are unable to login, please first make sure you are using all lower-case letters for your username/email address. If you still have difficulties, please contact us via email at info@a-m-i.org.uk so we can rectify your problem.

Not a member?
Learn more about the benefits of becoming a member or apply online and we will be in touch.

The fair treatment of vulnerable customers

The fair treatment of vulnerable customers

Areas for firms to work on

In its Dear CEO letter to lenders on the rising cost of living, the FCA referenced an update on vulnerable customers. This important and useful update assesses the progress of firms in ensuring vulnerable customers are treated fairly and receive outcomes that are as good as those for other consumers. Although originating from lender reviews, the FCA’s comments and observations are relevant to the wider financial services sector including mortgage intermediaries. It should also help firms as part of Consumer Duty implementation.  

Whilst the FCA has seen positives in how firms treat vulnerable customers, it has flagged the following areas for firms to work on:

Use of MI – this is often not well-developed enough, with a lack of examples of MI that track and give effective comparisons of outcomes for customers in vulnerable customers against other customers (this will help ensure vulnerable customers are being treated fairly). MI that is shared with executive committees (or senior management or Director level) must be of sufficient quality to achieve the aims of the vulnerable customers guidance and give assurance that customers with characteristics of vulnerability are receiving fair outcomes. MI also needs to be of a consistent quality across departments.

Looking beyond complaints data – the FCA found that firms are over-reliant on complaints data. Firms should think about broadening the data they collect and analyse; for example, whether customers in vulnerable circumstances incur broker fees and charges more frequently or in greater amounts than other customers. Or data that shows customer retention to understand why customers decide to no longer deal with the firm. For example, have customers switched to another broker firm part way through the mortgage process and why was this? Under the Consumer Duty, firms will be expected to broaden the volume and variety of MI as we shift from the mindset of ‘treating customers fairly’ to ‘delivering good outcomes’.

Capturing data on customer needs – firms should ensure they are capturing information about customers’ needs and characteristics of vulnerability by developing systems and procedures to capture such information. It’s important systems and procedures allow staff to record and access the information and to ensure that customers do not have to repeat information to other members of staff. AMI is aware that firms have started to add “vulnerability” flags to CRM systems and text boxes to allow staff to add further comments. Whilst these efforts are to be applauded, they will not provide consistent MI to be of value to a firm and to satisfy FCA expectations under the fair treatment of vulnerable customers and the Consumer Duty. Firms should be thinking about more structured, consistent assessments of vulnerability. AMI is aware there are commercial offerings that help firms measure and assess vulnerability and view these as useful tools for firms, particularly when we consider the evidencing and monitoring requirements under the Consumer Duty.

Monitoring effectiveness of vulnerability staff training – firms should think about how they can monitor the effectiveness of training as part of their strategies on vulnerability, to make sure that it’s meeting its aims.

Role of senior leaders in driving the correct culture – FCA commented that ‘where we have seen firms with well-developed vulnerability strategies, we have tended to see senior leaders that are involved, accountable and invested in the work’. A firm’s vulnerability strategy should be comprehensive and cut across the whole business. Key considerations are clear lines of accountability for senior leaders and the ability of senior leaders to demonstrate how vulnerability features in senior and executive committee decisions and the information that flows upwards (e.g. to senior management team or board). The FCA’s supervisory approach will look at who is responsible for the firm’s approach to vulnerability, with the expectation that they will be able to demonstrate what they have done to meet their responsibilities.

The fair treatment of vulnerable customers is a key component of delivering good consumer outcomes under the FCA’s Consumer Duty. With firms required to focus on monitoring and evidencing good consumer outcomes, the use of quality and consistent data and information will be key to firms meeting their regulatory obligations. Firms need to demonstrate that they understand customer characteristics, including how they amended their processes to accommodate these characteristics, and be able to evidence this.

AMI plan to issue further guidance on this topic as part of its work on the Consumer Duty.

X

Forgot Password?

Join Us