Following a recent Financial Conduct Authority warning, Forbes Securities, a mortgage and protection brokerage, has mandated the completion of vulnerability assessments for all clients.
In line with the requirements of the consumer duty, Forbes Securities recently implemented MARS, the MorganAsh Resilience System, to assess and manage customer vulnerability.
Instead of being optional, Forbes Securities requires that all clients complete an assessment and consider it as part of accepting terms and conditions.
This follows a recent warning by the FCA that it has taken supervisory action against firms with “weak identification of vulnerable customers”.
Under the consumer duty, firms must assess and monitor the vulnerability of all clients throughout the lifetime of products, forming an integral part of its overarching goal of delivering good outcomes for clients.
Forbes Securities owner and director, Mike Kellet, commented: “Personally, I believe that the main thrust of consumer duty obligations for mortgage brokers will be client vulnerability monitoring - ‘to identify and track foreseeable harms’.
“If protections for life and income are not put in place at inception, and properly tracked to completion then - in the event of death, illness or disability - the property could be repossessed.
“This is a major foreseeable - and preventable - harm. The FCA, Fos and claims lawyers will certainly take this on in the event of a claim - and I don’t see any defence for it now consumer duty is in place.
“Once reporting starts, any broker who cannot make a declaration based on evidenced management information on consumer duty obligations, in a ‘timely manner’ will fall foul of the FCA’s rules, which may endanger their regulatory status to continue trading.”
The company explained that each client will receive an email inviting them to complete an online questionnaire.
Additionally, for those without an email or who are unable to complete it, the questionnaire can be completed by the adviser.
MorganAsh managing director, Andrew Gething, said: “We expect firms to be able to identify and address when particular groups of customers receive systematically poorer outcomes.
“While most firms have taken a softly-softly approach to vulnerability, it’s great to see an example of a proactive firm rising to the challenge.
Gething added that many within financial services have a “fear” that asking personal questions on health and lifestyle will be a turn-off for clients, but this is not the case in practice.
“Indeed, many people are far more comfortable talking about health and lifestyle than money matters,” he continued.
“Within the MARS platform, we give several options on how data can be collected, giving flexibility to accommodate individuals and different processes.”
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
