You may have heard a lot about lender and provider fair value statements, some lenders may also have sent those to you, and you are wondering what you need to do with them.
You will be pleased to hear that it is the responsibility of the Network to review these for the lenders we have on our panel.
As part of Consumer Duty, we have collated the Fair Value Statements and completed an assessment to check that the product appears fair and that the target market for the product is consistent with the customers our advisers are recommending the product to. We have also looked to consider if there are any characteristics of the product that make the product suitable or unsuitable for vulnerable customers.
This is an ongoing piece of work, as lenders launch new offerings. We will be conducting lender reviews on a minimum of a yearly basis, and in some cases as frequently as quarterly for some of our most used lenders.
The purpose of these fair value statements is for them to be reviewed at the Network level and not at the individual customer level.
So while copies of these will be available from the lenders, their websites, BOX and the sourcing systems, you are not required to add these to the customer file on OMS and you must not give them to customers.
Therefore, there are no changes at this time to your current research process, meaning the selection of mortgage lenders should still follow the ‘Cheapest Rule’ requirements.
For protection, Connect belong to the Genus Protection Club, which offers a ‘loaded panel’. This means that the customer is charged a higher premium than may be available by the customer directly so that the commission for the adviser can be higher to reflect the work involved.
We have completed a re-assessment of this panel offering as part of Consumer Duty. At this moment in time, we are satisfied that the additional advice and services the customer benefits from when using an adviser still represent fair value under the Genus panel. However, for any adviser still operating under the old ‘non-advised’ model, we will have already been in contact to help you to switch to the fully advised model.
Fees Policy
Following the previous communication about fees, there have been a couple of questions, so I will just touch on those themes.
Some of you are concerned about the cap that will be applied to the fees you can charge. It is important to note that the fair value of broker fees is being driven by the FCA rather than Connect.
The feedback we have received is that the caps being applied by the larger Networks are considerably lower than the Connect offering, and in many cases, the Networks are not allowing percentage fees.
We have also adopted a tiered approach which means a higher cap for the more complex products, and for the majority of the unregulated mortgage products, there is no cap.
As part of Consumer Duty, this is being monitored by lenders. For example, lenders like Coventry send us regular reports detailing specific cases where the fee is more than 1% of the mortgage, regardless of whether it is Residential or Buy-to-Let.
To support all advisers, while we have issued this guidance, we are of course happy to consider individual requests either on a case-by-case basis or where the Network Member can provide their own acceptable fair value assessment of a different fee and service model.
You can view the guidance again in more detail in BOX
NETWORK FEE GUIDANCE: View Here
SETTING YOUR OWN POLICY: View Here
If you need any further assistance, please do not hesitate to contact the Compliance team: compliance@connectmortgages.co.uk
Kind Regards
Alan Baldwin
Director of Compliance
Call : 01708 676110