Fixed-rate mortgages continue to dominate the headlines, as the average two-year fixed rate rose to 6.66% earlier this month – the highest level in 15 years.

So, with more and more households struggling to make ends meet, the focus remains on mortgage firms to demonstrate how they can help these consumers.

This was further iterated when the Chancellor met with mortgage lenders late last month to agree on additional support for customers who could be at risk of becoming – or are already – vulnerable because of escalating rates. As a result, support measures have been introduced, and although voluntary, the expectation remains on mortgage firms to do the right thing for those struggling.

With the long-awaited Consumer Duty era upon us, delivering and evidencing good consumer outcomes is the new ‘business as usual’ for FCA-regulated firms. This critical period for the mortgage sector, coupled with current volatile market conditions, demonstrates why now’s the time to make good consumer outcomes an integral part of your firm’s short and long term strategy.

Why focus on advanced data analytics, AI and oversight?

In the Dear CEO letter to mortgage lenders and administrators, the FCA highlighted the role that AI can play in helping firms meet their Consumer Duty expectations, stating that “firms should carefully consider the requirements of the Duty as they make more use of artificial intelligence (AI), advanced analytics, and big data”.

The directive continues: “The rules and guidance on monitoring outcomes and consequent need to provide for thorough monitoring and understanding of customers’ outcomes from such analytics, and for swift intervention if poor outcomes emerge.”

In turn, firms are now realising that embedding the Consumer Duty and monitoring its outcomes is no mean feat – and that human resource investment alone isn’t going to provide the required level of oversight to consistently monitor, review and evidence good customer outcomes.

Consequently, ‘Show me, don’t tell me’ is the new mantra for businesses to comply with under the Consumer Duty, which can seem an overwhelming task. So, how can mortgage firms ensure the outlined higher expectations of evidencing workload and effectiveness of their compliance teams without increasing costs?

Unleash the power of smart tech: monitor, review and evidence outcomes

The Consumer Duty’s transformational scope encompasses the entire business lifecycle. And as such, it’s likely to require a fundamental rethink of your approach to governance, compliance and oversight across all aspects of your interactions with consumers.

Whatever phase you’re at, one thing is for certain: the rules significantly raise the bar for the oversight you’ll be expected to maintain and report on.

But not only that: the Consumer Duty’s increased emphasis on outcomes – not just process adherence – brings a renewed focus to ongoing customer interaction monitoring and reviews.

This data-driven supervisory approach makes it all the more important for firms to provide clear-cut evidence through monitoring and reviewing outcomes on an ongoing basis – and to proactively address issues with processes and behaviours if and when they’re falling short.

Opt for sustainable compliance and fresh operational efficiencies

Implementing a targeted, risk-based approach to your customer oversight has never been more vital.

Your firm can strengthen and demonstrate its commitment to the Consumer Duty by introducing AI-enabled RegTech solutions – like ReviewAI from our tech partner Recordsure. The tech, specifically designed for the mortgage sector, helps firms achieve a superior oversight and understanding of customer calls and cases, allowing for more timely intervention if and when poor outcomes are identified. ReviewAI brings actionable insights to mortgage firms that are looking to refine their processes and deliver long-term compliance:

• Automate assessments of each and every case to provide complete oversight of process adherence failures, which will provide a data layer to feed into the Consumer Duty evidencing and outcome testing portfolio
• Support a consistent approach to assurance and compliance monitoring with AI-driven data input
• Enable better targeting of reviews to support evidencing of consumer outcomes for specific segments
• Enhance the efficiency and effectiveness of suitability reviews and extract quantitative data from a qualitative process

We unite smart people and smart technology to offer a more effective way to monitor, review and evidence consumer outcomes whilst ensuring cost efficiencies for our mortgage sector clients.

The Consumer Duty is here for the long haul – and the 31st of July is just the starting line. TCC’s experts, along with our revolutionary tech can help you drive sustained positive change and stand you in good stead for all that lies ahead.