The Association of Mortgage Intermediaries (AMI) has responded to the FCA’s announcement on its new Consumer Duty and has broadly welcomed the regulator’s plans.
As part of AMI’s consultation response and direct engagement with the regulator, the trade body raised several concerns and flagged areas where clarification was needed. We are therefore pleased to see:
AMI said it was pleased to see an implementation period of 12 months for new and existing products and services. While AMI had called for longer, it says the FCA has listened to feedback and given firms a total of 24 months implementation for closed products and services. This should help alleviate pressures on historic back books, AMI said. The FCA has also made it clear that manufacturers should aim to complete all necessary reviews for existing open products and services and share relevant information with distributors by end of April 2023.
Clarity on roles and responsibilities and the level at which fair value assessments should be conducted, was also welcomed by AMI. FCA has clarified that firms are responsible only for their own activities and do not need to oversee the actions of other firms in the distribution chain, with firms only responsible for the prices that they control. Fair value assessments (under the price and value outcome) sit at a product or service level and not at individual customer level.
AMI was also pleased by the inclusion of the word ‘causing’ in the cross-cutting rule ‘avoid causing foreseeable harm’. AMI said that will this is seemingly minor, if omitted could have resulted in firms becoming liable for harm outside of their responsibility or control.
Robert Sinclair (pictured), chief executive of AMI, said: “AMI played a key role in engaging with the regulator, other industry trade bodies and member firms to ensure the mortgage intermediary voice was heard on one of the biggest regulatory changes the financial services sector has seen within the last decade.
“The implementation timeframes will be tough, with the FCA expecting by end of October 2022 firms will have agreed their implementation plans and how they will oversee delivery of the new rules.
“It’s therefore important for firms to start work on this now. AMI will help and support member firms to interpret and understand the implications on our sector and plan to work with our lender trade bodies to understand roles and responsibilities, including how we might be able to standardise lender disclosure of product fair value.
“We are generally pleased with the outcome but as always, the devil is in the detail and we are in the process of reviewing the final rules and guidance. Much will depend on how this is supervised and how FOS deal with this new principle. AMI will remain alive to how these develop.”