Knowledge Bank has turned on a flag today to alert brokers about potentially vulnerable clients ahead of the Consumer Duty guidance launch.
The lending criteria database says the flag is being activated “six weeks ahead of the Consumer Duty rules [governed by the Financial Conduct Authority], which come into effect on 31 July to help brokers to get used to what areas to look out for”.
It adds: “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.”
The firm will also add the flag to its evidence of research tab over the next few weeks, 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 FCA’s new guidance applies to all of the UK’s 60,000 regulated financial firms, including the mortgage industry’s roughly 100 lenders and 18,000 brokers and broker firms.
The regulator says the aim of the wide-ranging guidance is to set out “higher and clearer standards of consumer protection across financial services”.
Knowledge Bank chief executive Nicola Firth adds: “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.”
