The FCA’s new Consumer Duty requirements, which came into force at the end of July, will set clearer standards of consumer protection across financial services, particularly in relation to putting the consumer first.
At Ideal4Finance, we constantly review our consumer-facing processes and aim to keep improving them, so we welcome this move from the FCA. Although, as a broker, we act only as a vehicle through which consumers access finance from third party lenders, we still need to ensure we are doing everything we can to ensure their needs come first.
Last year, we set up an inter-departmental Consumer Duty Task Group to enable us to address the requirements of the Duty with as broad a perspective as possible. By bringing together key members of our teams, we have been able to implement changes and improvements, where required, efficiently and effectively.
Focusing squarely on consumer facing processes, our goal is to ensure that our clients’ customers feel well-informed and supported during the loan application process. We’ve already asked all our lenders to provide us with evidence of their response to the Consumer Duty, but the application process itself is ours and we are working hard to ensure it is as straightforward and stress-free as possible.
We have a duty to our clients’ customers to make sure they understand the risks involved and potential disadvantages associated with taking out a loan. This is made clear at the beginning of the application process, with the customer unable to continue until they have confirmed they have read and understood our risk statement.
We are also transparent about any commission we may generate as the result of a loan being completed. Again, affirmation of the customer’s understanding of this is required before the application can proceed.
The Consumer Duty places particular emphasis on those customers who might be classed as vulnerable for one reason or another. The definition of vulnerability is now based on four factors: health, life events, resilience and capability, suggesting that anyone could become vulnerable at any time, especially during times of increasing economic hardship.
All staff at Ideal4Finance already undertake interactive training in how to identify whether a customer may be vulnerable, and how to manage that situation should it arise. We now also provide regular refresher training to ensure that the issue of vulnerability remains a priority.
There are over 50 million financial services consumers in the UK and they rely on our sector to deliver positive outcomes and protect them from mistreatment and harm. The Consumer Duty has definitely brought this into sharper focus but, realistically, financial services businesses should already have the consumers’ best interests always at the forefront of all their thinking.
Noel Corcoran, CEO
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