Driven by the FCA's Consumer Duty, a new compliance culture aims to hold mortgage professionals to higher standards
Compliance in the specialist mortgage sector is evolving from a back-office task into a strategic tool for improving broker-lender relationships. In the wake of the FCA's Consumer Duty, brokers and lenders are being held to higher standards - not just in what they do, but in how and why they do it.
"Consumer Duty has made sure brokers and lenders have a mutual understanding of each other’s activity," said Annette Miles, Compliance Director at Pepper Money. "It’s been a cultural shift, with a greater emphasis on evidencing the 'how' and 'why'."
Consumer Duty was introduced to raise standards of consumer protection in the financial services sector. It places a higher and clearer standard of care on firms to ensure they deliver good outcomes for retail customers. It focuses on four key outcomes for customers:
- Products and services: Products and services must be fit for purpose and meet the needs of consumers.
- Price and value: Products and services must provide fair value.
- Consumer understanding: Communications must support and enable consumers to make informed decisions.
- Consumer support: Firms must provide support that meets consumers’ needs throughout their relationship with the firm.
With this move from rules to principles, both brokers and lenders are expected to demonstrate fair value and clear communication. Miles said brokers must now go beyond "transactional advice" and clearly show how their recommendations benefit the customer. "Record keeping around decision-making is critical in demonstrating fair value."
She added: "It’s about being transparent in how key product features are communicated, without overloading customers."
A two-way street
Good compliance isn’t just an internal metric. It should be the foundation for trust between brokers and lenders. "While we must keep professional boundaries, there is value in sharing best practice to improve the customer journey," said Miles. This includes offering training and clear feedback on case submissions to help ensure a smoother process on both sides.
The goal, she said, is to align expectations so that the broker-lender relationship supports, not complicates, the experience for end customers.
Concerns about due diligence slowing down business are valid, but they aren’t inevitable.
If due diligence is working effectively, it should have minimal impact on deal flow, said Miles. She also emphasized that proportionality is key: diligence should reflect the broker’s size and complexity.
Data-driven oversight, such as tracking early redemptions or arrears, can flag issues without disrupting daily operations. "Management Information lets us identify follow-up areas without being intrusive. Done well, it also highlights opportunities for product or process improvement."
Navigating complexity in specialist cases
Specialist cases often involve borrowers with non-standard income or life circumstances, making vulnerability assessments more nuanced.
"Knowing how far to delve into a customer’s situation is a fine line," said Miles. "It’s not just about identifying vulnerability but understanding what that means for managing the mortgage now and over time."
She also flagged long-term affordability as a growing consideration. "While current rules focus on a reasonable assessment period, there’s a shift toward thinking about mortgage sustainability over the full term."
For brokers navigating the evolving demands of the specialist lending market, compliance is becoming more than a regulatory necessity. It’s part of a broader strategy to deliver better outcomes and build stronger relationships.
"We’re all learning as we go," Miles said. "But when compliance is treated as a shared responsibility, rather than a tick-box exercise, it strengthens the entire mortgage ecosystem."
