A new study into broker practices and understanding of vulnerable clients has revealed an urgent need for improved broker education and cross-industry collaboration to better address the challenges faced by vulnerable borrowers.
The research, commissioned by Smart Money People and facilitated by Newcastle for Intermediaries, found that while nearly nine in 10 brokers (89.1%) encountered a vulnerable client in the past year, a significant proportion (40.7%) never share vulnerability information with lenders. This is largely due to a lack of clarity from lenders, with more than half of brokers (58.2%) citing the absence of clear guidance on how and where to disclose such information as a primary barrier.
BROKERS CALL FOR MORE SUPPORT
The findings also highlighted gaps in broker understanding, with 47.9% expressing a desire for deeper knowledge about the drivers and importance of identifying vulnerable customers. To address these gaps, brokers called for practical resources, including:
- Dedicated areas on lender websites (71.8%)
- Detailed written guidance (32.2%)
- Training initiatives (27.6%)
These measures, brokers believe, would help them better support vulnerable clients and achieve positive outcomes during the mortgage application process.
Michael Conville, chief customer officer at Newcastle Building Society, said: “Fostering a culture of Diversity, Equity and Inclusion is one of the five strategic priorities at our Society, and so it’s important that we better understand vulnerability in all its forms so that we are able to support brokers in a way that delivers the best possible outcome for their clients.
“Taking a collaborative approach to drive action is key to enabling positive change across brokers and lenders”
“Being able to bring together mortgage lenders to discuss and raise the standards available across the industry reflects our wider purpose to support this area.
“Our shared commitment is to ensure every customer has a positive experience, whether it’s providing clearer guidance, improving education, or leveraging technology to streamline processes. Taking a collaborative approach to drive action is key to enabling positive change across brokers and lenders. We’re proud to have facilitated this working group, which will be instrumental in shaping the future of the industry and ensuring positive customer outcomes.”
INDUSTRY-WIDE COLLABORATION
The study was driven by a cross-industry working group that aims to shed light on the industry’s current approach to vulnerability and the challenges brokers face. The group emphasises the importance of collaboration among brokers, lenders, and other stakeholders to create a more inclusive and supportive environment for vulnerable borrowers.
The Financial Conduct Authority (FCA) defines vulnerability as individuals who, due to personal circumstances, are more susceptible to harm, particularly if firms fail to act with adequate care. Vulnerability can be temporary or long-lasting, and the FCA’s 2022 Financial Lives Survey revealed that 47% of UK adults—approximately 24.9 million people—exhibit one or more characteristics of vulnerability.
SURVEY INSIGHTS
The collaborative survey, conducted by Smart Money People, was supported by Newcastle for Intermediaries alongside 27 major lenders, mortgage clubs, networks, trade bodies, and large firms. Distributed across lender broker pools, external press coverage, and the Smart Money People broker community, the survey garnered 245 broker responses between 30 September and 23 October 2024.
Jess Rushton, head of business development at Smart Money People, said: “While brokers are increasingly aware of client vulnerability, these findings highlight a need for deeper, practical support.
“A better understanding of vulnerability drivers, along with standardised processes and clearer guidance from lenders, could empower brokers to confidently support clients who may otherwise hesitate to disclose their circumstances.”
CALL TO ACTION
The study underscores the urgent need for unified efforts across the mortgage industry to ensure brokers are equipped to identify and support vulnerable clients effectively. By fostering better communication and providing the necessary tools and training, the industry can work together to safeguard vulnerable borrowers and promote more equitable outcomes in the mortgage process.
Rob Sinclair, chief executive at Association of Mortgage Intermediaries (AMI), added: “AMI were delighted to be asked to support this initiative on what remains one of the key areas in most firms Consumer Duty projects where greater clarity is required.
“The research helps identify where the issues are and give clarity on steps which could be taken to improve support, communication and outcomes.
“Our hope is the industry through its trade bodies can impel firms to work together to deliver consistent policies and processes.”
