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A compliance refresh will lighten unavoidable market stress

Bob Hunt

Bob Hunt

11 April 2024
Two things caught my eye this month that I think could be related and are indicative of the world we live in, both as individuals socially and professionally, but also in terms of the variety of responsibilities that are placed upon mortgage advisory firms, particularly those of the directly authorised (DA) persuasion.

First up, and this was something I wasn’t personally aware of, is that April is ‘Stress Awareness Month’. Few of us will be fortunate not to suffer from any sort of stress-related issues, either at work or at home, and increasingly we need to be aware of our own mental wellbeing, and that of others who we live and work with, and how it can be damaged by stress. 

According to research from Stress Awareness Month, 79% of UK adults experience stress of some kind at least once per month, while 74% said they had felt overwhelmed or unable to cope at some point in the last year. 

From a work perspective, 52% of workers said they were ‘battling burnout’, a 9% increase since before the pandemic, but only 13% of those surveyed said they felt comfortable talking about their mental health openly at work. 

Managing stress in a healthy way 
People under stress have a higher likelihood of exacerbating their situation by drinking more alcohol, eating unhealthily or smoking. From a work perspective, employees with stress are much more likely to take time off work, often exhausted, with clear impacts on productivity as well, which are likely to impact on the firm and other employees. 

It’s therefore vitally important that as individuals, firms, our industry in totality, we take stress seriously; that we understand it, how we can help ease it, and we’re aware of early warning signs and we put in place mechanisms and processes to help deal with it.

To that end, I would advise you to look at the website: https://www.stress.org.uk/sam2024/, which has a whole host of information and resources designed to support individuals and firms. 

Identifying potential triggers 
The other headline that grabbed my eye on this very site was the story, ‘FOS prepares for ‘slight increase’ in mortgage complaints’. 

While it might not feel like an obvious link with Stress Awareness Month, it will be clear to all mortgage advice firm owners (and employees) that regulatory responsibilities, and the constant increase in them, can of course put ‘stress’ on firms, particularly in very different environments to what we have seen over the past decade or so. 

The Financial Ombudsman Service (FOS) believes the increase in complaints is likely to come off the back of higher interest rates, resulting in borrowers moving onto more costly products as a result of the very different rate environment now.

Now, at present, we might be looking at rates coming down – certainly compared to their high point last year – but clearly for most borrowers who are due for remortgage over the next 2-3 years, unless we see a big shift downwards in rates, they are likely to be paying more for their next mortgage. 

The question in some borrowers’ minds here might be, who to blame for that? They might blame the government and punish them at the next election, but they also might try to ‘blame’ their adviser, even if – as is highly likely – everything has been done correctly, all the paperwork is in order, and the recommendation reasoning is clear. 

We all know that there is a cost with any complaint, not just monetary, but potentially reputational, even if that complaint is not valid, or upheld by the ombudsman.

There will, of course, be a sense of vindication, but any complaint is likely to be a stressful experience, even if ultimately, the result falls in your favour. 

Being well-prepared 
However, what we clearly want is not to get to this point in the first place, and therefore now is potentially the right time for a ‘spring clean’ on the compliance front, particularly for DA firms who are responsible for themselves in these (and all) areas.

Perhaps the use of a compliance consultancy – or just ask your existing one – to run the rule over existing processes, functions, policies and documentation, to make sure you are doing all you should be and that you are giving yourself the very best chance of A) not getting a complaint in the first place, or B) fighting it off successfully because you have all the evidence to do so. 

We know this market and this sector can be stressful at the best of times, and part of mitigating the stress placed upon staff and those who own the firms is to be as prepared as you can, and have plans in place should things happen, like complaints, that could otherwise increase that stress.

Doing that work now should hopefully help you prepare for the worst, while letting you continue to do your best.

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Office address: 1310 Solihull Parkway, Birmingham Business Park, Birmingham B37 7YB
Paradigm Mortgage Services LLP is registered in England and Wales. Company No: OC323403. Registered Office: Paradigm House, Brooke Court, Lower Meadow Road, Wilmslow, SK9 3ND
Paradigm Mortgage Services LLP is a Limited Liability Partnership.