MCOB rules state that when looking at mortgages being proposed for consolidation purposes, brokers must consider the costs associated with increasing repayment periods.
They also must take into account the appropriateness of securing previously unsecured loans or credit cards. Most importantly, if it is known that clients have experienced payment difficulties, they must consider whether it is more appropriate for them to negotiate arrangements with creditors rather than take on new borrowing.
Yes, the debt solutions market is not regulated by the FSA, but as we know its reach is long and clearly brokers who fail to demonstrate that they have discussed all the possibilities, including the objective merits of formal or informal payment agreements with creditors, are likely to find they are in breach of Treating Customers Fairly.
And if brokers think that sending clients to their nearest Citizens Advice branch demonstrates the best possible customer care, they should think again.
By their own admission, these branches are understaffed and while they do a fantastic job, their resources are finite.
Consumers need help today and their problems will escalate unless they are dealt with quickly. Simply furnishing them with the phone number of their local Citizens Advice branch does not constitute TCF, it’s just passing the buck.
As brokers our role is not just to sell loans and mortgages. Access to funds is limited, particularly for those with less than healthy credit records.
But even if you’ve only got a rudimentary knowledge of the debt solution options, there is a third way.
Brokers can refer clients to professional debt solution counsellors who can provide advice, outline in detail the possibilities available to clients and offer tailored solutions, either by way of individual voluntary arrangements or more informal debt management plans where appropriate.
Customers will remember those who helped them get back on the road to financial health and brokers who show a duty of care will benefit in the long run.
TCF Debt Solutions