What is Consumer Duty?
Consumer Duty is the focus that our firm will apply to standards of care in all consumer retail activity and transactions. The Financial Conduct Authority has stipulated that Consumer Duty must be central to a firm’s operation if it is to succeed in delivering consumer-focused outcomes.
Principle 12 of the Consumer Duty states that a firm must act to deliver good outcomes for retail customers.
How have we made it central to our operation?
The Financial Conduct Authority has identified three rules that must be adhered to at all times by regulated firms delivering products and services to their customer base which are subject to Consumer Duty. These rules are termed cross-cutting and are as follows:
- Act in good faith toward retail customers
- Avoid foreseeable harm to retail customers
- Enable and support retail customers to pursue their financial objectives
Our brokering service
The firm operates as a credit broker and not a lender in the consumer retail market. We are responsible for the distribution of a number of consumer products that have been deemed suitable for this market sector by both our firm and our funding partners.
Pre-point of sale:
We market financial promotions which meet the standards required by the Financial Conduct Authority and record these promotions in a register. The financial promotions adhere to rules regarding clarity of information, financial consideration, product type and displaying of financial particulars. We will supply variations in quotation including changes in financial product type and/or asset type without obligation and include the supporting information as required. All of our consultants are fully trained to understand and explain the mechanics of all types of finance agreements and how they can be expected to perform throughout the term quoted.
The customer can expect to receive a recommendation from our consultants based on their financial objectives, however, the customer will be required to ultimately make the decision to proceed or not.
Point of sale:
In the event that a customer does not proceed, we will ask them if they consent to have their data processed by the firm in regard to relevant future marketing. In the event that a customer does proceed, the next stage in our brokering service is to supply an order form which details all relevant financial and asset information. The customer can then check this form along with such documents as the Information Notice, Initial Disclosure Document and Business Terms And Conditions, which are all supplied prior to the point of sale. The Information Notice states that our status is as a broker and not a lender and that we may receive financial remuneration for transacting the customer's business. We openly acknowledge a consumer's right to make an enquiry as to the value of this remuneration prior to the expiration of any such cancellation period.
Our Customer Order Form clearly states the cancellation policy of the business and what charges apply and why they apply.
Following the commitment to the order by the customer, we establish the credit facility with the lending partner by collecting relevant information only and disclosing to the customer that in our capacity as a broker, we will be submitting their business and/or personal data to the lending partner so that a credit assessment can be made.
Post-point of sale:
The firm uses a cloud-based technology platform that meets Sectigo independent security protection standards to store relevant customer data and documents. We are able to access such information quickly and securely via a customer search, once we have correctly identified that we are liaising with the customer making representation.
It may at certain times be relevant for our firm to either glean information from our funding partner for the customer or establish contact between the funding partner and the customer so that both of these parties can liaise directly. In the event that we are required by either of those parties to administer or participate in any way then providing the requirement falls within our scope of financial permissions, we do so and record the information and outcome against the customer file specific to the product to which it relates.
Consumer outcome 1: Products and services
The business reviews its product offerings within all market sectors each year and we supply:
- products supplied by Financial Conduct Authority regulated funding partners
- products which have not been subject to any professional criticism from within or outside of the industry
- products on which our staff have been trained to fully understand and explain to consumers
- products which are diverse across their range and as such are able to meet a wide range of consumer requirements
- products which are judged to be consistently competitive at the market level over a period of more than a decade
- products which have not been associated with unfair, onerous or constricting consumer terms by the regulatory body vii) products which do not alter or vary throughout their term with regard to their performance
A customer should expect to receive a recommendation, however, is responsible for making an informed decision about the product.
The firm will undertake measures to evidence good customer outcomes by monitoring and recording data relating to customer agreements. The data will be analysed periodically by the management of the firm to greater understand whether consistency in relation to Principle 12 is being reached, and to identify any shortfalls in respect of this. Improvements can then be made, documented and actioned where required.
Consumer outcome 2: Price and value
Our firm offers products and services that provide fair value with a reasonable relationship between the price consumers pay and the benefit they receive. We charge customers a fee to process new business and a fee to formally extend the financial term, which correlates with the fair value aspects of Consumer Duty. Customers will be entitled to a full refund of this fee in the event that we fail to discharge any of our brokering duties prior to or at the point of sale.
The firm acknowledges and accepts that under section 155 of the Consumer Credit Act 1974 customers are entitled to a refund of all but £5 of a credit broking fee if they haven't taken out a loan found by the broker within six months. The credit broker is allowed to keep £5 of the fee.
The firm is obligated to supply products to the customer that offer fair value in relation to the total financial consideration paid by the customer over the term of finance, and the benefit that the customer is likely and reasonably able to derive from the financial product. The benefit derived by each customer is likely to vary, however, the value of the brokering service is in its ability to provide information and consultative guidance to the customer to position the customer to compare and contrast products and then make an informed decision in terms of how to proceed.
The cost of the brokering service to the customer reflects the true costs to the firm in delivering the service and is standardised to ensure that all customer groups pay the same.
The firm has a reasonable requirement to be able to charge cancellation fees to customers who use the brokering service of the firm, place a formal order including the completion of a customer order form and then choose not to proceed with transacting an agreement.
If the firm provides a brokering service to the customer then it is reasonable to levy a fee to the customer equal to and not greater than the stipulated documentation fee in respect of this work. In the event that the customer does not proceed after this stage, then providing that the decision not to proceed is made by the customer for any reason other than the firm failing to discharge its obligations under Consumer Duty, then the fee will stand.
The business terms and conditions of the firm stipulate that in other instances, it is reasonable for the firm to levy a cancellation fee in excess of the documentation fee in order to cover costs borne by the firm in transacting the customer business. The firm offers a unique solution within the industry in that the ancillary products which are often applied to the asset and become the subject of the finance agreement, can be varied by nature and substantial in cost. Where these products are required by the customer then the firm has to order them and often pay for them prior to the delivery of the asset to the customer. If a customer then cancels the asset which has been specifically modified to their requirements, the firm must reasonably be able to recover these costs from the customer to ensure that it does not suffer financial detriment to the extent that it will not be transacting the cancelled business.
The firm also has to reasonably have the ability to recover monies for suppliers if the asset has been modified for the customer and the customer subsequently cancels the transaction, if the value or resale of the asset is likely diminished by way of the nominated customer modifications.
Consumer outcome 3: Consumer understanding
The firm trains its staff to be able to ascertain the demands, needs and objectives of the consumer through a series of questions. The information collected by the firm in relation to this is always proportionate so as to allow us to make any appropriate recommendation to the consumer, without unduly influencing their choice and their ability to make a decision that is suitable for them.
The firm will communicate in a way that supports consumer understanding and equips consumers to make effective, timely and properly informed decisions. This includes providing customers with prominent, sufficient and timely information about the nature of the credit broking services provided by the firm and our role in the process as follows:
- supplying a financial promotion that meets all regulatory requirements
- providing the consumer with all relevant information about our firm and the financial product and asset
- providing product information at the quotation stage to allow the customer to fully understand the consideration
- allowing the consumer time and due reflection period in which an informed decision can be made
- collecting appropriate information to establish the requisite credit facility
- formalising the introduction of the consumer with the funding partner
The firm will ensure that distribution strategies are appropriate. For example, when customers are passed to other companies, including other brokers, the customer is made aware that this is happening and the reasons for it. The referral does not happen in a way that will cause customers' foreseeable harm both in terms of financial deterioration and data protection and sensitivity.
Customers will be able to cancel financial products without a barrier prior to the date at which the agreement is legally binding. Cancellation of the financial product after the date at which the agreement becomes legally binding may be possible however in this instance the funding partner may levy a fee of termination. Prior to the date that the agreement becomes legally binding, the customer is able to switch to a more suitable product without a barrier should they wish.
Consumer outcome 4: Consumer support
We will provide support that meets consumer needs throughout the life of the product or service that they select. This includes ensuring that staff who broker credit and other financial products have sufficient training, knowledge and experience to accurately answer or redirect any queries they receive about the operation of the product.
We will also ensure that customers do not face unreasonable barriers, for instance when making a complaint. In addition, ensuring that customers in financial difficulty receive fair and appropriate support remains a key priority and a key outcome that the Consumer Duty seeks to enhance by ensuring that firms act in their customers’ interests.
The firm operates a post-point-of-sale liaison for all customers. We appreciate that it is highly likely that customers will have questions about the performance of their financial product at various times throughout its term. It may be appropriate in certain circumstances to refer the customer directly to the funding partner with whom they are legally in agreement, however, the firm holds permissions for both debt counselling and debt adjustment which allow a scope of interface in these areas if appropriate.
Our representatives will keep in touch with all customers throughout the life of their product in order to ensure that the customer is at all stages fully aware of how the product will perform for them. Towards the end of the term and taking market asset supply conditions into account, our consultants will engage with the customer to supply new information to allow them to make an informed decision regarding their product renewal.
Customers face no barriers or difficulty in both obtaining competitor information and also in moving their custom away from our firm. The customer will never be subject to a fee for opting to use a competitor service and to cease the business relationship with us. We hold financial records for seven years and will always supply details to relevant parties on request, and once we are satisfied that the party has a legal right to view the documentation.