Consumer Duty – Important information for Intermediaries
Expectation statement
New Financial Conduct Authority’s (FCA) Consumer Duty rules and guidance sets out the expected standards of consumer protection across Financial Services effective from 31 July 2023 for new and existing products or services that are open to sale or renewal (closed products or services on Wednesday 31 July 2024).
We have produced a helpful summary below about the expectations for mortgage intermediaries in relation to the FCA’s Consumer Duty.
This summary sets out the high-level expectations West Bromwich Building Society (the Society) has for mortgage intermediaries acting on behalf of mortgage applicants and customers introduced to the Society, in relation to Consumer Duty.
Firms impacted
Consumer Duty applies across the distribution chain, including product and service, origination, distribution and post-sale activities to a retail customer within the scope of Consumer Duty, including if they have a material influence over, or determine, retail customer outcomes.
Expectations
Mortgage intermediaries are expected to adhere to our policies and procedures and all relevant regulatory requirements, including the FCA’s Consumer Duty.
Mortgage intermediaries are expected to comply with the following Consumer Duty rules:
- Consumer Principle and Cross-Cutting Rules
- Consumer Understanding
- Consumer Support
- Colleague Capability and Training
- Product Distribution.
The FCA sets out the requirements in relation to the distribution chain of products and services which apply to the Society as product manufacturer and to mortgage intermediaries as distributors.
A mortgage intermediary is required to obtain information from the manufacturer about the product, including a high-level summary of the benefits to the target market, information on overall prices or fees and confirmation that the manufacturer considers that total benefits are proportionate to the total costs.
The mortgage intermediary must also ensure that its own fees and charges offer fair value, and that payment of these does not result in the product or service ceasing to be fair value overall.
If you are aware of any issues with your customer communications which indicate they are not adapted to ensure they meet the needs of customers with characteristics of vulnerability, you must let us know as soon as possible and include information on actions to address this.
The Society has produced a ‘product and customer fair value statement’ available on our website www.wbfi.co.uk which provides the relevant product and fair value information to allow your firm to comply with your responsibilities under the Consumer Duty.Monitoring customer outcomes
We expect mortgage intermediary firms to provide us with any relevant sales and management information we request, to demonstrate that our products are being distributed correctly with consideration of customer outcomes.
Customers in vulnerable circumstances
The FCA’s definition of vulnerability is that – “A vulnerable consumer is someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”.
Mortgage intermediaries should have proportionate policies and procedures in place for customers in vulnerable circumstances, such as:
- How you support customers in vulnerable circumstances.
- Suitable training on recognising and supporting customers with characteristics of vulnerability is in place.
- A process is in place to allow customers to share and record support needs with you and consent to share with us.
- Making the customer aware that should they need to, they can contact us directly regarding additional support following completion.
Agreements and Terms of Business
Your Terms of Business agreement with us requires you to comply with all applicable laws and regulations including the Consumer Duty rules and guidance.
Complying with the Consumer Duty
Should you become aware that you are unable to comply with the relevant elements of the Consumer Duty, please let us know as soon as possible, using your normal business contact.
Consumer Duty - Feedback to CP21/36 and final rules