Easy Peasy Lemon Squeezy

Believe it or not there was a time when I fully embraced the dark side of marketing: compliance.

Yes, I know. I know. I won't be taking any questions at this time.

Jokes about 'Sales Prevention Units' aside, anyone who has worked in a financial services marketing department long enough will be fully familiar with the thousand-yard-stare you develop when your carefully-crafted copy comes back swathed in virtual or very actual red pen amendments.

And that makes for a complicated, uneasy, sometimes tetchy relationship between these two competing sides of the same communication coin.

But never let it be said I can be so petty as to avoid overcoming such professional differences. Especially when there's money to be made.

So it was that my idea for a marketing consultancy business was born back in 2004. And I called that business Lemon Squeezy Marketing.

With almost a decade of marketing experience behind me at that point working for Friends Provident, and having developed a detailed understanding of the mortgage market, I spotted an opportunity to strike out on my own.

In 2000, the Financial Services and Markets Act (FSMA) set out a new regulatory framework for the financial services industry and in 2004 the newly-established Financial Services Authority (as it was known then) introduced new regulation to the mortgage market - 'Mortgage Code of Business' (MCOB).

Up until this point, the mortgage market had largely fallen under the remit of the Consumer Credit Act which, from a financial promotional point of view, left a lot to be complied, never mind desired in terms of consumer understanding and protection.

My consultancy USP was that I not only understood how to help advisers market themselves more effectively, but with my detailed knowledge of MCOB I could help them do that more compliantly, too.

Easy Peasy. You catch my branding drift there...

As MCOB went live at the end of October that year, it was clear that many mortgage brokers had failed to grasp the enormity of the task ahead of them in terms of changing brochureware, websites and adverts to make them compliant. Even 'High Street Names' were getting it wrong. Consistently. So what chance was there for the 'little guys' with no marketing department or compliance teams to fall back on?

I entered this landscape with the offer of simple, even free reviews of websites and advertising copy to help identify potential problems and propose solutions that could yield a better ROI and help avoid uncomfortable conversations with the regulator further down the track.

Finding potential new prospects was like shooting fish in a barrel at that time, looking at the websites and press ads of dozens of local mortgage broker firms, nearly all of which had failed dismally to adhere to the new regulations.

I figured I'd have at least three, maybe up to six months before the industry caught up with itself, put its house in order and I'd no longer be able to use the regulatory sprat to catch the new business mackerel. But by then I hoped my business would be well-established and I'd no longer have the need to rely on what was a loss-leading offer.

Nearly four years later when I wound up my business, the industry had still not fully caught up. I was still spotting examples of 'old world' statements and risk warnings pretty much everywhere. I'm not entirely convinced I couldn't find the odd few even today if I looked hard enough. But I daren't look. Now that I've been to the dark side I've realised there's a compliance officer's 'eye twitch' that mirrors the thousand-yard-stare of marketers.

Different sides. Same coin.

The thing with this regulation, like many updates to the Financial Services 'Rule Book' over the years (even major ones introduced by FSMA) was that the fundamental basics of mortgage advice didn't really change. You still needed to 'know your client' and search the market to recommend the best and most appropriate outcome for your client's needs.

The key focus of MCOB was the way in which mortgage brokers and lenders documented and communicated their services - designed to remove not only confusing ambiguity in certain terminology but also to drive a greater level of understanding of the borrowing consumers were about to undertake and how it compared to other alternatives (including the cost of borrowing and the risks involved).

So, it is with a certain nervous sense of déjà vu as I consider the current state of the later life lending market now that we are the best part of a year into the latest regulatory upgrade, Consumer Duty.

Up to a point, Consumer Duty can be viewed as a reinforcement of existing regulation. Indeed, it was not uncommon to hear advisers speak of its introduction as an "upgrade" to TCF in the months leading up to the regulations going live.

But there was an inherent, reductive danger in simply passing this off as 'TCF-Plus' and assuming that, if you were already playing within the Rules Of The Game, there was really very little if anything for the average adviser to worry about.

Consumer Duty was never about simply weeding out the rotten apples or making it harder for them to operate.

I think the FCA's review of widespread "poor advice and misleading communications" that followed just a matter of weeks after Consumer Duty was introduced puts that myth well and truly in the ground.

The requirements now placed on advisory firms by Consumer Duty to not only focus on customer outcomes but to also understand and define their target market, and to properly communicate with customers in a way that helps them understand all of the options available to them is about far more than simply adding a few extra questions to a fact find.

Advisers need to properly review, assess and update their communication strategy, from their website to their brochureware and financial promotions, and not just assume that something which was compliant on the 30th July 2023 will still be "OK". This is not a "close enough" situation when, even before Consumer Duty, it was clear that there were ominous shortcomings in the way this industry was conducting itself.

Firms also need to learn from this as an ongoing process and take remedial action where necessary. It's not a one-and-done review to ensure you have the right risk warnings in the right font.

As this industry struggles to recover from one of the toughest years of trading in its history, I do worry that we will stagger blindly on without paying the right or certainly enough attention to the detail of these new regulations until it is too late and the FCA clamps down even harder.

So, what are the key things advisers and advisory firms should be doing right now if they have not already done so? Here are some of the things I'd be recommending clients of mine:

1. Educate and Empower Consumers: In light of the Consumer Duty regulations, transparency and consumer understanding are paramount. Take proactive steps to educate consumers about the intricacies of later life lending products, including the risks and benefits involved. Develop clear, jargon-free communication materials and think about the journey your prospects take when they land on your website, what they learn along the way and how you can demonstrate that learning - perhaps through interactive tools, quizzes and feedback
2. Prioritise Suitability and Fair Outcomes: With the Consumer Duty emphasising the importance of ensuring products are suitable for individual consumers, tailor your communication approach to address the specific needs and circumstances of each client, and communicate product features and risks in a manner that aligns with each client's financial goals and preferences. Use this lens to look at all of your communication channels and ensure you are focussing on tangible outcomes, not sensationalist language and unrealistic promises
3. Enhance Compliance and Oversight: Given the regulatory scrutiny surrounding marketing communications in the later life lending market, it's essential to strengthen compliance processes and oversight mechanisms within your firm. Conduct regular reviews of marketing materials to ensure compliance with regulatory requirements, and provide ongoing training to staff members to promote a culture of compliance and accountability. Again, don't get lost in the weeds of "is the risk warning in the right place" and miss the bigger picture of clarity, transparency and understanding of the message.

I hope in four or five years from now, I'll be looking back across an industry that made a huge leap in customer understanding and outcomes by embracing the spirit of the new regulatory framework and realising that it was there to help, not hinder this market's growth potential. The action we need to take in order to achieve that and boost consumer confidence in later life lending is not difficult.

It's easy peasy.