Knowledge Bank turns on Consumer Duty ‘flag’ for brokers doing criteria searches

14 June 2023

Knowledge Bank, the UK’s largest and most comprehensive database of lending criteria, today turns on a specialist ‘flag’ to alert brokers when they have searched for an element of criteria that may indicate a client is vulnerable.

The flag is being turned on now, six weeks ahead of the Consumer Duty rules coming into effect on the 31st July to help brokers to get used to what areas to look out for. The flag will help with the early identification of borrower vulnerability alerting brokers to the fact that additional questions may be needed to be asked of the client and more care may need to be taken. Brokers getting used to seeing this flag can start to think ahead of what supplementary questions they may ask and what additional measures they need to put in place.

Knowledge Bank will also add the flag to the ‘Evidence of Research’ over the next few weeks. This will be highlighted so that there is documented evidence for a broker’s compliance file which can be provided to the regulator to prove that a Consumer Duty issue was flagged and considered when making the lender recommendation.

The Consumer Duty flag will also help lenders using KB Pro, a Knowledge Bank product that lender’s use as their own internal criteria system. It will highlight which areas of their criteria in granular detail are affected by Consumer Duty. This will be available to lenders’ internal sales teams, underwriters, branch staff and BDMs from next week.

This launch follows Knowledge Bank’s earlier announcement of a report that is available to lenders to track the frequency and volume of Consumer Duty related broker searches and highlight underserved areas of the market. This will both save lenders hours of work and will demonstrate best practice as well as giving them valuable insight into the lending landscape specifically in relation to Consumer Duty.

Nicola Firth, CEO of Knowledge Bank said, “Consumer Duty will be a significant sea change for both brokers and lenders. The level of care needed when advising clients is definitely increasing a notch.”

The FCA paper says, “Our rules require firms to consider the needs, characteristics and objectives of their customers – including those with characteristics of vulnerability – and how they behave, at every stage of the customer journey. As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met.”

Nicola Firth continues, “One of the most challenging aspects of Consumer Duty is identifying instances of vulnerability as it is far more complex than many of us may realise given the transient nature of vulnerability at various stages and events in people’s lives. The Knowledge Bank flag, being visible at the very first stages of a searching for a mortgage will help brokers to be aware of when they need to put additional measures in place at the very beginning of the advice process. This will help to protect both them and their more vulnerable clients and help brokers evidence that they have done so and give them the ability to save it to their compliance file.

“However, we have also thought about lenders and the information that they will need, both for their internal teams and to stay at the forefront of the market by being able to identify gaps in the market and opportunities with our cutting-edge market insights.”

Lenders or brokers wanting to find out more about KB Pro or Knowledge Bank can visit: www.knowledgebank.uk