According to Bank of England statistics that highlight the stress in the UK mortgage market, the amount of mortgage balances in arrears increased by 13% in the second quarter of the year to reach the highest level since 2016.

In recent months, rising interest rates and unemployment have reduced household disposable income, prompting some households to reduce or stop making monthly mortgage payments.

In areas of the country where tenants are experiencing the increased cost of living, pressure has also been placed on buy-to-let mortgage payers. The overall amount of mortgage balances with some arrears increased to £16.9bn, up 29% from the prior year and the largest amount since the third quarter of 2016.

As every lender will tell you, the Consumer Duty rules are shaping and forging new ways of addressing and evidencing borrower vulnerability correctly. The Finalized Guidance for Firms on Consumer Duty is very clear about the need for businesses to make sure that mortgage customers who might have their homes repossessed are treated fairly and appropriately. In the current economic climate this especially applies to the vulnerable who are at risk of harm.

Nevertheless, even though a large portion of the training to address these requirements will undoubtedly focus on the soft skills needed by staff to comprehend and apply best practice, the regulatory requirements need to be included and captured. This is to demonstrate organisations’ understanding of what the FCA expects of firms dealing with clients who are in arrears with their mortgage or lending payments – especially as these clients are now deemed vulnerable in the majority of cases.

We have moved very quickly from a rather benign environment for legacy systems of static low interest rates to a period of very volatile change and now the repercussions of those rate movements for borrowers and lenders alike.

So, while lenders will understandably create dashboards to monitor the high- level performance of operations in these challenging times, I urge business leaders to consider the devil is in the detail and the evidence is in proving that even at a micro-level, the operational capacity is there to deliver the right treatment of vulnerable borrowers and the evidence that on a case-by-case basis this was achieved. Paper work arounds will work while volumes are low but if the problem ever became one of scale then work arounds will fail.

Target operating models must adapt in a setting where interest rates are fluctuating quickly, consumer duty evidence delivery expectations are rising, and more digital broker and borrower experiences render older platforms unable to deliver change quickly, effectively, and affordably.

Future difficulties will require systems that can adapt to these headwinds while also providing agility and interoperability. When the next shock is unknown, you need to be as well prepared and equipped to deal with it promptly and confidently as you can be and be able to prove as much to the powers that be.

Jerry Mulle, Ohpen UK managing director