MorganAsh comments on FCA's Dear CEO letter to mortgage intermediaries - reinforcing Duty and customer vulnerability

31 January 2025

Andrew Gething, managing director of MorganAsh, said:

“This latest letter to mortgage intermediaries from the FCA further proves the point that embedding and enforcing Consumer Duty is an absolute priority. In particular, the letter emphasises the need to be alive to the challenges of an increasing number of customers facing vulnerabilities or challenging financial circumstances.

“It is once again a call to intermediaries to go beyond just assessing whether a client meets criteria to ensuring the advice we provide meets their needs, characteristics and financial objectives. However, if we don’t truly know who our customers are and what proportion have characteristics of vulnerability, we cannot achieve this, nor can we prove that the requirements of Consumer Duty are being met.

“It is no secret that this one of the biggest challenges across all areas of financial services, and one of the regulator’s biggest frustrations. Whether it’s the recent CII report, the FCA’s review of Duty board reports or the regulator’s extensive market research, all have shown difficulties in identifying, classifying and recording customers characteristics and reducing potential harm. The upcoming vulnerable customer review from the FCA is likely to continue this theme as it surveyed firms over 2024 on how they have implemented customer vulnerability management.

“The regulator knows how onerous this is, hence why it has long advocated for technology adoption and deployment. Rather than burying heads in the sand or waiting for others to provide a solution, firms absolutely need to be taking advantage of the proven tech that is available. With the right systems in place, firms can consistently identify and support vulnerable customers and retain evidence for the regulator. We can then start to communicate vulnerabilities with lenders and improve both awareness and outcomes even further.”