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Consumer Duty would benefit from action on product withdrawal timescales

In the current mortgage market, one of flux and regular change, it is perhaps not surprising many stakeholders are concerned about the impact such frequent change can have on both their businesses and the end customer.

This, of course, sums up the position advisers have found themselves over the past few months in having to navigate an environment in which fluctuating money markets have resulted in regular product changes and withdrawals.


You may well have seen the AMI/IMLA Q&A Guide for mortgage professionals entitled, ‘Understanding lender funding, product availability and pricing’, which covers amongst other areas, why lenders might not be able to give 24 hours notice when it comes to product withdrawals, despite the intermediary market pleading for it and many lenders wanting to accommodate that sensible expectation.


The conundrum of product withdrawals

I would think there are few mortgage market professionals who are not aware of the reasons lenders provide for short notice of product changes, however ultimately – and specifically within the new Consumer Duty environment – you have to wonder whether enough planning and thought is given to a strategy which gives your most trusted distributors and their clients such a limited amount of time to make both a recommendation and a highly important financial decision.


That is essentially the nub of the problem such withdrawals create for advisers and their customers. In providing hours, sometimes minutes notice, are lenders delivering the best they can for the customer? Does such action, and the subsequent headaches it causes for all, really create the ‘positive consumer outcomes’ the Consumer Duty needs the sector to deliver? I sadly doubt it.


Take the example of an adviser dealing with an existing customer who then discovers they have only hours to conduct all the work they need to secure the product they have recommended. And they must obtain the client’s agreement in short order?


Now, even for one case being worked under these circumstances, you would suggest it’s a ‘beyond the pale’ situation, but the likelihood is the adviser may have several customers facing a similar pressure point.


Plus, we all know a decision by one lender inevitably leads to others following suit, for fear they will be exposed or selected against and consequently inundated with business, impacting service levels and funding pressures. We can’t ignore the fact such scenarios can also have a detrimental effect on the workload of lender employees – and nobody wants that.

Consumer Duty and rapid decision-making

Presuming the adviser can contact the client within the limited timescale, how Consumer Duty-friendly is a situation where you are asking an individual to decide on a product which is likely to be their biggest monthly commitment, in a matter of minutes?


You would take longer to buy a kettle or washing machine, and therefore lenders must acknowledge they are potentially contributing to a situation where some could suffer financial detriment, were it not for the robust advice standards of intermediaries.


To say this might attract regulatory attention in future, appears to be an obvious point to make, but it is the customer who could feel the pain of this decision the most, and therefore that would suggest to me, that lenders need to spend time seeking a solution to a rapid withdrawal of products.


This is not even an argument about the commerciality of advising, because you might justifiably argue this sort of ‘conflict’ or, dare I say it, ‘customer confusion’ works in favour of consumers taking professional and expert advice. How might any borrower looking at the market currently conclude they don’t need advice when it seems to be a journey strewn with so many obstacles and so many opportunities to get it wrong?


This environment leads consumers to professional advisers, but still at its heart, the decisions lenders are seemingly forced to make in withdrawing products within a short timeframe, have the capacity to cause customer detriment, and for that reason alone, they should consider what alternative solutions exist. If they are not doing so already.


It seems to be a sound argument I heard from one adviser posing the question, ‘Well if lenders such as Coventry Building Society can give 48 hours’ notice as a matter of course, why can’t others?’ They are hardly a small lender somehow immune from the commercial exposure of other major players, and I appreciate many other lenders will say they give their best endeavours to provide 48 hours notice, but when some instances are more akin to 48 minutes, you’ll be forgiven for the adviser community not taking some lenders seriously.


With Consumer Duty in place, we should continue to back AMI’s, and many other stakeholders, stance to keep pushing lenders to improve product withdrawal practices, and provide much greater notice periods, as soon as possible. Customers certainly deserve more certainty.


Rob Clifford is the Chief Executive of Stonebridge
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