Estate agencies who operate mortgage broking subsidiaries or operations face greater scrutiny after the FCA launched its Consumer Duty initiative.
According to the financial services watchdog, this will set higher and clearer standards of consumer protection and require firms to put their customers’ needs first.
Although primarily aimed at the UK’s huge consumer credit and investment sectors, it will also apply to the mortgage market but only for new agreed mortgage going forward, not retrospectively – and only be implemented after July next year.
For mortgages, the new ‘Duty’ follows the position in the Mortgage Conduct Business Sourcebook (MCOB) and it “therefore applies to all regulated mortgage contracts….but not, for example, unregulated buy-to-let contracts or commercial lending” the new handbook says.
To paraphrase its advice, FCA-regulated estate agencies broking mortgages will have to put as much effort into ensuring the ‘product’ is suitable for the customer as they do selling it.
This will therefore involve both good communications and pre-sale and post-sale support.
“Firms should consider whether they may be carrying out the same activities to a higher standard or more quickly when it benefits the firm, than when it benefits the customer,” it adds.
The FCA is to target key challenges within the financial services industry, but in particular “rip-off charges and fees”.
Sheldon Mills (pictured), Executive Director of Consumers and Competition at the FCA, says: “The current economic climate means it’s more important than ever that consumers are able to make good financial decisions.
“The financial services industry needs to give people the support and information they need and put their customers first.
“The Consumer Duty will lead to a major shift in financial services and will promote competition and growth based on high standards.
“As the Duty raises the bar for the firms we regulate, it will prevent some harm from happening and will make it easier for us to act quickly and assertively when we spot new problems.”