Mortgage agency’s remedy of debtors who use home loans to consolidate debt has improved underneath the Consumer Duty, however extra work must be executed, says the Financial Conduct Authority.
The City watchdog’s wide-ranging consumer-focused pointers got here into drive three months in the past, on 31 July, masking the UK’s 60,000 regulated monetary corporations, together with the mortgage business’s roughly 100 lenders and 18,000 brokers and dealer corporations.
It checked out how the brand new laws are working in its ‘Retail banking Consumer Duty multi-firm work’ report, which reviewed 70 merchandise from 47 corporations.
The regulator noticed examples of “improved processes for monitoring changes to customer circumstances across the product’s lifetime” when it checked out prospects who used home loans to mix money owed.
It factors out: “Some corporations had thought-about implementing ongoing suggestions loops with key distribution companions and began work to deal with frequent challenges within the chain which may trigger delays within the buyer journey.
“A limited number of firms had clear communication plans to support customers throughout the product lifecycle beyond that offered to customers who were not using mortgage products to consolidate debt.”
But the physique provides: “It was disappointing that a number of corporations didn’t contemplate that buyers had been utilizing mortgages for debt consolidation functions.
“We remind corporations they should guarantee they’ve meaningfully thought-about the debt consolidation buyer journey the place a product permits for debt consolidation.
“This is the case even where firms may not have specifically designated these products as debt consolidation products.”
The physique reminds corporations that the Consumer Duty is the “cornerstone of our three-year strategy and a key part of our work to set and test higher standards”.
It provides that it expects corporations to adjust to:
- the Consumer Principle, which requires corporations to behave to ship good outcomes for retail prospects
- the cross-cutting guidelines for corporations to behave in good religion in direction of retail prospects, keep away from inflicting foreseeable hurt to retail prospects, and allow and assist retail prospects to pursue their monetary aims, and
- our outcomes guidelines on the design of services and products, worth and worth, client understanding and client assist
The regulator provides that its overview can also be helpful for corporations “when considering what changes they need to make to closed book products as we head towards the 31 July 2024 implementation deadline for closed products and services”.
The wide-ranging overview additionally checked out agency’s remedy of consumers in monetary issue, coping with financial institution accounts of deceased or incapacitated prospects, fraud and safety breaches and business present accounts.
