Have service standards hit an all-time low?
When the first stage of Consumer Duty was implemented by the Financial Conduct Authority (FCA) a year ago, it was conceived as a way of setting higher and clearer standards of protection for consumers across financial services, and required firms to put their customers’ needs first.
No-one could reasonably argue with this, of course, and it was hoped that the majority of mortgage professionals were already showing this duty of care in their day-to-day business.
Certainly, the initiative would demand extra attention from mortgage personnel in terms of evidencing that they were fulfilling their obligations, but the overriding intention was – and remains – a good one.
Twelve months on, and a study of 2,000 consumers, conducted by the financial services review site Smart Money People, suggests that customers are seeing little positive impact.
It finds that 84% of those who participated have seen no difference in service from financial providers. Consumers’ biggest frustrations include having no access to human support (48%), untrained staff (34%) and no available phone number to call (32%).
How do brokers view service standards in the mortgage industry?
Michelle Lawson (pictured left), mortgage adviser and director at Lawson Financial, said she considered service standards to be at an all-time low, in over 20 years of being in the industry.
“Just now, I am on a live chat to a lender to change a product,” she shared with Mortgage Introducer. “I was given an estimated 20 minute wait to chat with an agent, which is already at an hour. I think that providers have heavily invested in tech to help them, but not necessarily help the consumer or end user.
“I would also say that working from home is a contributory factor. Staff don’t have the ability to be listened to/monitored, liaise with and listen to team members, and expand their knowledge, their skills and experience, as well as sense check their responses.”
She added: “The industry, as a whole, should learn the importance of excellence in communication, service, availability and knowledgeable staff for a happy customer. It’s not rocket science and shouldn’t be unusual, but the norm.”
Leon Diamond (pictured right), CEO of later life lender, LiveMore, said that his business put the customer first from the outset. “Implementing Consumer Duty has been a major challenge for lenders who didn’t already have a customer-first approach to their business,” he commented.
The FCA had been concerned that older borrowers were solely being offered equity release options, Diamond said, and were often unaware that other products were potential options for them too. LiveMore has developed a tool to enable brokers to key in client data to get a list of suitable mortgages. “It’s absolutely critical for us to get this right,” he explained.
Read more: FCA tells financial firms to treat PEPs better
What do financial services customers say about the service they receive?
Some 24% of respondents to the survey complained about an over-reliance on chatbots, while 7% reported worsening levels of service in the past 12 months.
Andrew Gething is managing director of MorganAsh, which provides software that helps brokers, advisers and financial services firms to better manage and evaluate customer vulnerability and comply with Consumer Duty.
“We know some firms are hoping to duck under the FCA’s radar,” Gething said. “However, we think such firms will not be able to hide behind the consumer radar and will, over time, lose out to those firms providing better outcomes as more start to use good outcomes in their consumer marketing.”
Richard Pike, chief of sales and marketing at mortgage servicing provider Phoebus, meanwhile noted that the first stage of Consumer Duty focused on loan originations. The deadline for the second stage, on July 31, is for lenders to comply with rules for all customers on their closed books.
Around 250,000 people are in closed mortgage books or have mortgages owned by firms which are not regulated by the FCA. Some 170,000 of these borrowers are up-to-date with payments and would be eligible to switch. The new rules will require a multitude of lenders to change their processes and communications with existing borrowers.
“For some, the second stage of Consumer Duty could be even tougher,” Pike warned, “especially for lenders that have been managing large volumes of closed books efficiently and profitably, who are likely to be reluctant to sell them on.
“It will be particularly cumbersome and challenging for lenders that don’t already have robust and agile servicing capabilities in place. They will either sell on their closed books, outsource to third-party administrators, or migrate with haste to a Consumer Duty friendly mortgage servicing platform.”
In the study, 81% of customers who apparently met FCA criteria for vulnerability said they had not seen any positive improvement in the way their financial services companies treated them over the past 12 months.
“This is why we are encouraging consumers to feedback on both good and bad experiences,” said Jacqueline Dewey, CEO of Smart Money People.
Mortgage Introducer approached the FCA for comment but had not received a response at the time of publication.
