Consumer Duty – time for mortgage practitioners to focus on consumer outcomes


There has been a lot written about the FCA’s, current, hot topic – Consumer Duty.  Like many other financial adviser and compliance magazines, T-CNews devoted many pages to the subject in the last issue.  I have worked with financial advisers and mortgage professionals for more decades than I care to recount.  As such, I have seen, and worked to implement, more seismic change in the mortgage industry than anyone needs to experience in a career; a voluntary mortgage code, professional qualifications, CPD, statutory regulation and treating customers fairly to name just a few.  I even sat on the advisory board that implemented the CML mortgage code of practice way back in 1998.  Looking back on what was the practitioner response to those historical changes.  I know I will offend some industry participants, but let me remind you; “That’s someone else’s problem”, “it doesn’t apply to us”, “we have got ages to do that”, “the deadline is not achievable – it will be pushed back”.  Frustratingly, decades later, these are the same procrastinating excuses I hear in respect of Consumer Duty.

Consumer Duty is not someone else’s problem, it is not going away, and the deadlines are not going to change

While ‘proportionality’ requirements means that the current spotlight has been on manufacturers and that the FCA deadlines generally focus on “products”, ‘services’ are equally important as it is not just product design and marketing where potential harm can originate.  Poor service delivery and sale can equally create or contribute to consumer harm.

Parliament considered Consumer Duty and supported it due to falling public confidence in retail financial services.  Anyone thinking that this is just the FCA tinkering at the edges, think again and re-read the FCA outputs (all of them).  The FCA “Portfolio strategy letter for Financial Advisers and Intermediaries” [2 December 2022] clearly explained the impact of Consumer Duty on advisers.  Frankly, it’s time for mortgage practitioners to start thinking ‘how do the Consumer Duty requirements effect the services I offer?’  Consumer Duty is not someone else’s problem, it is not going away, and the deadlines are not going to change.  It’s time to act.  The new statement of principle 12 nicely sums up the future; “Firms must act to deliver good outcomes for retail customers.”  I know mortgage practitioners will automatically say “of course we provide good outcomes”, but ask yourself – “do you”, “can you prove you do”?  Tough questions if they are properly considered.

Where should mortgage advisers start?  If you have done nothing yet (probably applicable to many smaller firms), a good place to start is the requirement that consumers receive good advice, “which is suitable for their needs and objectives”.  Clearly this means that services and processes must be tailored for different customer categories.  The same service and process for all customers simply does not work if Consumer Duty is fully embraced.  To emphasise my point, let’s think about mortgages.  There is such a diverse set of needs and customer vulnerabilities that can often be identified by the different product types.  Just look at the range; first time buyers, low LTV loans, high income multiplier loans, sub-prime lending, shared ownership, bridging lending, buy to let, new build – I could go on.  Thinking about the vulnerabilities and needs of customers in these different product silos might be alien to many firms.  Such firms, until now, may have adopted the view that simple processes on the basis that ‘one size fits all’ makes for efficient workflows.  That won’t ‘cut it’ in the future.  If a cultural change is needed to bring about such change, so be it, that is what the FCA wants.

Let me also remind readers, ‘If you can’t prove you have done what you say you did, you didn’t do it’.  Document these thought processes and any new procedures, focusing on how they ensure ‘good outcomes for retail customers’.


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Partner - Baxters Business Consultants - a business consultancy undertaking marketing, training, freelance journalism and expert witness services to the residential mortgage lending, building society and financial service industry (April 1993 to date) -

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