Lending criteria platform, Knowledge Bank, has introduced a specialist “flag” to alert brokers when they have searched for an element of criteria that may indicate a client is vulnerable.

The move comes six weeks ahead of the Consumer Duty rules being brought in by the Financial Conduct Authority (FCA) on 31 July, and aims to help brokers get used to areas to look out for.

Knowledge Bank said its flag will help with the early identification of borrower vulnerability, alerting brokers to the fact that additional questions may be required for the client and more care may need to be taken. Brokers getting used to seeing this flag can start to think ahead of what supplementary questions they may ask and what additional measures they need to put in place.

The Consumer Duty flag will also help lenders using KB Pro, a Knowledge Bank product that lenders can use as their own internal criteria system. It will highlight which areas of their criteria are affected by Consumer Duty and will be available to lenders’ internal sales teams, underwriters, branch staff and BDMs from next week.

“Consumer Duty will be a significant sea change for both brokers and lenders. The level of care needed when advising clients is definitely increasing a notch,” Knowledge Bank CEO, Nicola Firth, commented.

According to the FCA paper on Consumer Duty, the new rules will require firms to consider the “needs, characteristics and objectives” of their customers – including those with characteristics of vulnerability – and how they behave, at “every stage of the customer journey”.

“As well as acting to deliver good customer outcomes, firms will need to understand and evidence whether those outcomes are being met,” the regulator has stated.

Firth suggested that one of the most challenging aspects of Consumer Duty is identifying instances of vulnerability, as it is “far more complex” than many people may realise, given the “transient nature of vulnerability” at various stages and events in people’s lives.

“The Knowledge Bank flag, being visible at the very first stages of a searching for a mortgage will help brokers to be aware of when they need to put additional measures in place at the very beginning of the advice process,” she added.

“This will help to protect both them and their more vulnerable clients and help brokers evidence that they have done so and give them the ability to save it to their compliance file.

“However, we have also thought about lenders and the information that they will need, both for their internal teams and to stay at the forefront of the market by being able to identify gaps in the market and opportunities with our cutting-edge market insights.”

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