It doesn’t matter where you turn, change in the way Financial Services operates is visible.

The clues were in many ways visible early last year. The Financial Conduct Authority published the Woolard Review – a paper that assessed change and innovation in the unsecured credit market. It highlighted changes and a shift in thinking that is being played out across many sectors now – the notion of a Duty of Care. Borrower outcomes should be the driving force in lending decisions.

To that end, the Financial Conduct Authority (FCA) has published its long-awaited new consumer duty rules, extending it deadline for implementation from 30 April 2023 to 31 July 2023.

Regulated firms have a responsibility to treat customers fairly but the FCA is endeavouring to make this more explicit. It said last year that the new consumer duty would take effect at the end of July this year. Whether we meet that deadline or not, the direction of travel is unarguable.

At the vanguard of the change in the mortgage industry are mortgage brokers. The FCA wants to raise standards of how people are treated across the board, and mortgage brokers, being at the coal face of consumer advice will be among the first to deliver these changes into the borrower experience. As much of ninety per cent of the mortgages placed in some lenders are through intermediaries. This is a significant operational exposure.

The market is bracing itself. The changes are coming. Whether they are right, appropriate is for others to decide. The question I have for lenders is how do they know the requisite changes are being delivered or that slow or late delivery is not putting them and their borrowers at risk?

This points to a bigger question about how we understand and measure the effectiveness of the changes we make anywhere in our operating models. In the end we will measure our progress through data. This is where digital systems, providing better management information can underpin the market and help make better decisions.

Assessing borrowers’ vulnerabilities, for example, means collecting more better-quality data to underpin the right decision. Storing that data and having recourse to it is the evidence trail regulators may need to see in due course. The challenge is deciding what to collect and quickly putting processes and system changes to ensure it is being captured. With the right tech and processes, a truly objective process can be achieved.

Of course, to achieve that you need a platform that can flex and embrace data led changes affordably and rapidly. In addition, the fragmented nature of mortgage distribution suggests interoperable solutions will be the go-to solution in due course. But in terms of sorting out our own houses, systems that cannot evolve quickly to support the emphasis on duty of care will very quickly become an addition to the company risk register.

Cloud-native platforms like our own are highly configurable and offer the facilities to comply rapidly with new regulatory thinking without exposing the business to ‘delay risk’.  They also mean you can evolve as you learn and – judging from this latest evolution – there will be more changes to operational models to come. Lenders need platforms that can adopt these and facilitate the growth of the right kind of business.

Ahmed Michla, Head of Business Development – UK&I, Ohpen