Expert & facilitator: Tony Crane, Consultant
Headlines:
- The challenges and ambiguities surrounding the regulation, with concerns around lenders imposing their interpretations of Consumer Duty on brokers, emphasizing the need for a balanced and collaborative approach to implementation
- Debating fee structures: balancing fair value and service costs
- Supporting vulnerable customers: defining and addressing diverse needs
- Improving consumer understanding through enhanced communication
- Leveraging technology for better insights and personalization
Discussion points:
Responsibilities and collaboration
Participants discussed the perceived shift in responsibilities and the level of collaboration between different stakeholders, such as mortgage brokers, lenders, and providers. Some brokers expressed concerns about lenders imposing their interpretations of Consumer Duty on them, potentially disrupting the existing partnerships and working relationships. There were differing views on whether lenders should take the lead in implementing the regulation or if it should be a collaborative effort.
Fees and pricing policies
A significant portion of the discussion focused on fees and pricing policies in light of Consumer Duty. Participants debated the appropriate level of fees that brokers should charge, with some lenders suggesting fee caps or guidelines. Brokers expressed concerns about lenders dictating their pricing policies, arguing that it could limit their ability to charge fees commensurate with the services provided. There were also discussions around ensuring fair value and communicating the benefits to justify fees.
Vulnerable customers and segmentation
The identification and support of vulnerable customers emerged as a key topic. Participants discussed the challenges of defining and identifying vulnerability, with some suggesting a more inclusive approach by considering various factors beyond financial literacy. The concept of customer segmentation was also discussed as a potential strategy to better understand and cater to the diverse needs of different customer groups, including vulnerable customers.
Consumer understanding and communication
Participants explored ways to improve consumer understanding and communication in the context of Consumer Duty. They discussed the need for clearer and more accessible communication materials from lenders and providers, as well as the importance of advisors taking the time to explain complex concepts to clients. The use of technology and data analytics to enhance consumer understanding was also mentioned, with suggestions for interactive tools and assessments to gauge comprehension.
Key takeaways:
- Foster collaboration between mortgage brokers, lenders, and providers to align their approaches and interpretations of Consumer Duty.
- Develop industry-wide guidelines or best practices for fee structures and pricing policies that balance fair value for consumers with the ability of brokers to charge fees commensurate with their services.
- Implement standardized processes and protocols for identifying and supporting vulnerable customers, considering various factors beyond financial literacy.
- Enhance communication materials and processes to improve consumer understanding, including the use of interactive tools, assessments, and plain language explanations.
- Leverage technology and data analytics to gain insights into consumer behavior and preferences, enabling more personalized and targeted support and communication strategies.
- Encourage ongoing dialogue and knowledge-sharing among industry stakeholders to address emerging challenges and share best practices related to Consumer Duty implementation.
