Over the next few days, many asset finance brokers will be busy reviewing materials sent by funders, as we approach the deadline for the next stage of the FCA's Consumer Duty implementation.
According to the FCA, by 30th April, 'Manufacturers should have completed all the reviews necessary to meet the outcome rules for their existing open products and services so they can share with distributors to meet their obligations under the Duty, and identify where changes need to be made.'
In plain English (which is decidedly missing from this whole subject) this means that lenders need to set out what their brokers should be doing to meet the new Duty. For example, what groups of prospective customers are lenders happy to receive introductions to? What lender-specific information should brokers provide to prospective customers? What should the broker do if a prospective customer may require an extra level of support?
It's all fairly logical and most - not all! - of the early communications from funders that I've seen have been well-prepared and helpful. But they are just the previews of the packs that funders seem to be waiting until these last few days to issue.
As I covered in my earlier blog, Six actions to help asset finance brokers look on the bright side of Consumer Duty, it will keep things simpler under the Duty if - for regulated business - DiC is not used (even though, ironically, DiC is usually more aligned with customers' interests than fixed commissions). So it will be interesting to see if lenders move in that direction. More generally, we can only hope that different lenders' guidance is fairly compatible.
The role of the broker is so well aligned with the Consumer Duty Principle, this should not cause major disruption. For any brokers who spend their bank holiday weekend reading through the packs and start to wonder if regulated business is worth all of the effort, I hope they will ask for a bit of assistance (from me or others) so they can see Consumer Duty as a positive development.
With a few adjustments to documentation and procedures, Consumer Duty should provide much-needed clarity on what's needed to show that the vital support brokers provide to their customers is not only compliant with the long-standing FCA CONC rules, but is also very clearly delivering the right customer outcomes for hundreds of thousands of small businesses.