Dear CEO | Release Date: 29th June 2022
To read a longer summary of this Dear CEO letter, click here.
To access the original FCA document, click here.
Short Summary
The FCA’s letter to Lifetime Mortgage Providers details the supervisory strategy and expectations amid heightened financial risks due to the pandemic and rising cost of living. It stresses the importance of firms assessing and mitigating potential risks to ensure consumer protection, particularly in the face of increasing financial instability among consumers, evidenced by rising inflation rates and growing financial vulnerability.
The letter outlines concern that lifetime mortgage consumers, particularly those experiencing financial stress, might be susceptible to purchasing unsuitable equity release products. Firms are urged to proactively support customers impacted by the cost-of-living crisis and to ensure products are suitable and comprehensively understood by consumers.
The FCA emphasises the ongoing relevance of its Tailored Support Guidance and Vulnerable Customer Guidance, urging firms to apply these frameworks to aid customers facing financial difficulties effectively. Firms are expected to have robust governance mechanisms to manage and report risks, including operational disruptions and consumer financial distress.
Additionally, the FCA plans to monitor and interact with firms to ensure they meet the outlined standards, especially concerning the treatment of vulnerable customers and the management of financial promotions and operational risks.
Key Take-aways for Affected Readers:
Firms should rigorously assess their products and customer interaction strategies to ensure they are protecting and supporting consumers, particularly the vulnerable. It is vital to adapt business practices to align with regulatory expectations on consumer treatment, operational resilience, and risk management. Firms should prepare for continued scrutiny and possible regulatory engagement to ensure compliance with these enhanced consumer protection expectations.