COMMENT
Duty calls Lenders should be wary if their back office is not making the most optimal lending decisions, says David Wylie, in the light of upcoming Consumer Duty rules.
At an industry event earlier this month I overheard someone call the FCA’s looming Consumer Duty standards ‘Treating Customers Fairly on steroids’. There can’t be many in the industry who won’t privately admit to thinking this is a fairly accurate characterisation of what is coming down the track. The industry has until July 2023 to implement what is a far stricter code on new and exist- ing products. Amongst its standout features is the requirement for regulated firms to con - sider ‘the needs, characteristics and objectives of customers (including those with characteristics of vulnerabil- ity) and how they behave, at every stage of the customer journey’.
As well as acting to deliver ‘good’ cus- tomer outcomes, firms will need ‘to understand and evidence whether those outcomes are being met’. The FCA wants Consumer Duty to ini- tiate a major shift in financial services, promoting competition and growth ‘based on high standards’. It says that, as Consumer Duty ‘raises the bar’ for the firms regulated, it will prevent con - sumer harm and will ‘make it easier for it to act quickly and assertively when we spot new problems’. You only have to ponder the wording of the above to realise where this might lead, particularly for those whose back offices cannot always ensure compli - ant lending.
I need not remind anyone that the ‘heads-you-win, tails-you-win’ Financial Ombudsman Service is still in place, where, for zero cost, consumers can lodge a mis-selling claim against a lender. However tenuous, there is still no disincentive for anyone to lodge a dubious or unfounded claim, and we know how badly that works for lenders and how profitable it can be for the claims-chasing industry. A number of high-profile providers, par - ticularly in the HCSTC end of the market, are no longer in business as a result of misjudging their compliance and being inundated with claims. Wonga was perhaps the most notable, but there have been many others over the years.
08 | Metrics Monthly
Q3 | 2022
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