Through existing Financial Conduct Authority regulation and guidance, mortgage lenders are already required to treat customers fairly, something that has been in place for many years.  With implementation of the Duty, customers can expect to see an even sharper focus on ensuring good customer outcomes. 

Across the mortgage distribution chain, all firms - including lenders, brokers, packagers, administrators - are expected to put customers at the heart of all that they do when designing, manufacturing, communicating and distributing products and services.

Consumers will receive the information they need to make good decisions when buying financial products or services, such as mortgages.

For lenders and other financial services firms, implementation of the consumer duty brings significant and complex challenges, including a need to ensure that their processes align with the Consumer Duty requirements.

To support our members with their implementation of the Duty, UK Finance worked collaboratively with the Building Societies Association (BSA), the Association of Mortgage Intermediaries and the Intermediary Mortgage Lenders Association to develop two key business-facing resources: 

Standard product information sheet template

This is for mortgage lenders to share high-level information with intermediaries. The template, as a business-to-business document, helps lenders demonstrate they are meeting the target market and fair value requirements of the Duty. Lenders share their completed templates with intermediaries by sharing links via major sourcing systems.

While developed specifically for mortgages, this template approach can be used more widely by other manufacturers in different financial services markets/ distribution chains. 

Sharing information in this way means distributors can now fulfil their obligations under the Duty and make sure they are targeting the customers the product is intended for.

Information sharing guide

This is to help promote proportionate and relevant information sharing between mortgage intermediary firms and lenders to support the delivery of good consumer outcomes. It is non-prescriptive and principles-based, but helps firms meet their obligations under the Duty.

For mortgage lenders, implementation of the Duty has been made more complex and challenging through the introduction of the new Mortgage Charter. One of the options under the Charter allows customers to self-select to move to interest-only payments for six months, with an automatic switch back to a capital and interest at the end of this period, without affordability checks.  Exercising this choice brings into play Duty issues relating to consumer communications and understanding.  

We are engaging with the Financial Conduct Authority (FCA) and the Financial Ombudsman Service to agree approaches which enable lenders to deliver Mortgage Charter supports while respecting Consumer Duty rules and requirements.

Mortgage Charter options are expected to be fully available from August, closely following implementation of the Duty for new and existing products and services. 

Over the coming year, lenders and firms in the mortgage distribution chain will be working on meeting Duty requirements for closed products and lending books. The journey continues.