VouchedFor’s Elevation has identified five gaps for mortgage advice firms relative to the Financial Conduct Authority’s (FCAs) Consumer Duty rules.

Elevation’s analysis was based on feedback from more than 250,000 clients.

Central to the Consumer Duty guidance is the need for firms to take particular care when communicating with consumers in vulnerable circumstances.

However, Elevation’s research found that 18% of mortgage clients said they could have felt more comfortable being open about their situation in their initial meeting.

Ensuring consumers understand the benefits and costs associated with an adviser’s recommendations is another key component of the Consumer Duty rules.

Elevation reveals that 31% of mortgage clients do not understand how their adviser will earn money from their mortgage, including whether they need to pay for the advice, after their initial meeting. 

The Consumer Duty rules also state it is important that consumers understand the risks associated with the options presented by their adviser.

However, analysis shows that 22% of mortgage customers did not discuss any associated risks with getting a mortgage during their initial consultation. 

Consumer Duty rules state that communications must be likely understood by the average consumer and must equip consumers to make effective, timely and properly informed decisions. 

Elevation’s research shows that after the initial meeting, some mortgage clients are lacking clarity as 12% reveal they did not have a clear expectation of when different stages of their mortgage process would be completed.

Finally, firms should ensure their customers are adequately supported throughout their relationship with the firm but data shows that 16% of mortgage clients had to chase their adviser at least once.

The FCA published its long-awaited new Consumer Duty rules in July.

Alongside publishing the rules, the FCA announced a deadline extension for implementation from 30 April 2023 to 31 July 2023.

The new deadline is for existing products and services. For closed items, firms have until 31 July 2024 to comply.

At the time of publication, the Association of Mortgage Intermediaries (Ami) urged firms to “start work on this now”.

Ami said it was pleased to see the implementation period of 12 months and 24 months for existing products and services and those closed, respectively.