What does the FCA's Consumer Duty consist of?

A new Principle that ““A firm must act to deliver good outcomes for retail customers”. Three new cross cutting rules; Act in good faith towards customers, avoid foreseeable harm and Enable and support customers to go after their financial objectives. These Cross-cutting rules have been created by the FCA to ensure greater clarity on their expectations under the duty. Four Outcomes areas that represent key elements of the firm-consumer relationship which are instrumental in helping to drive good outcomes for customers; Products and services, Price and value, Consumer understanding and Consumer support.

What challenges to meeting its requirements have we found?

We have identified and begun addressing several challenges ahead of the April and July 2023 deadlines. These include: Our Product Lifecycle Management (PLM) process: This process governs how we design, develop and manage our products. We’ve already updated it to reflect the enhanced requirements of the Consumer Duty. We regularly review our products and services to make sure they’re competitive, effective, and fit for purpose. Monitoring price and value: We have robust measures in place that govern how we manage and monitor the price and value of our products. We have reviewed and updated our value for money framework and are currently completing our fair value assessments so we can supply the information that distributors will need from us by the end of April. Boosting customer understanding and support: We have reviewed customer touchpoints across our new business and post-sale journeys to understand customer outcomes and improve how we communicate with and support our customers. So, we’re reviewing the content of our communications and what we send at different points in the customer journey. We are currently testing our communications where appropriate. Improving customer outcomes: We’re looking at customer outcomes across our end-to-end journeys and defining what sort of evidence we’ll need to monitor and report on them. We’ll also need to be able to request that kind of information from distributors and share it with third parties.

Do we anticipate any impacts on our external relationships with distributors and suppliers?

The breadth and scope of the new requirements mean that we’ll need to: work closely with our distributors and suppliers to collectively deliver good customer outcomes carefully consider the data and management information we receive and share across our customer journeys, ensuring greater transparency and the right levels of oversight across all parts of the distribution chain continue to engage with the regulator and other stakeholders during the iterative implementation period, supporting industry-wide best practice.

Product governance

On our later life mortgages

We’ve provided below some important information about our approach to Consumer Duty including information about our product governance processes and who our products may or may not be suitable for.

Our response to the FCA’s Consumer Duty

We fully support the FCA’s Consumer Duty and its focus on delivering good outcomes for customers. Our consumer-centred purpose aligns with their drive to:

maintaining high standards of conduct across retail markets
enabling customers to make well-informed, confident financial decisions

How does the Consumer Duty affect us?

The Consumer Duty shapes how we operate both directly and through our distribution partners. It applies to our interactions with retail customers, as well as to the way we design and deliver products through third-party distributors, with the end customer at the heart of the distribution chain. This dual role provides us with valuable insight into both the opportunities and practical challenges of delivering good customer outcomes under the Duty.

Our group-wide Product Lifecycle Management (PLM) framework and Product Risk Review processes already incorporate elements of the Consumer Duty. We have reviewed these as well as agreeing other minimum standards to support consistency across our different business areas.

Our range of later life lending products

Our later life lending product range is designed to offer clear, distinct solutions that support a wide range of customer needs and circumstances. As part of our ongoing Product Lifecycle Management (PLM) and Consumer Duty approach, we maintain clear and consistent product definitions to help advisers and distributors identify the most appropriate option for their customers.

Information about our target market definitions:

Our core target market definitions are split into three sections:

Section one: Core qualifying criteria
Section two: Key points customers must understand about the product
Section three: Which customers might fall into the target market, now including who the product is suitable for, more detail about tax and health status, etc.

Our target market includes customers who:

understand the impact that compounding interest will have on the value of their estate
have considered and rejected other forms of borrowing and downsizing
are willing to take financial advice and pay the fees associated with entry into the product.

Each product within the range is designed to meet different income profiles:

IRLM is for people with limited or uncertain income or, who aren’t confident that they can commit to regular payments
OPLM is for people who have enough income to be confident that they can make regular payments covering some or all of their monthly interest, for at least some of the mortgage term
PTLM is for people who have a sustainable income to pass our affordability assessment to make contractual monthly interest only payments for an agreed specified term, after which they'll stop making these payments and instead, the interest will be rolled up and added to the amount they owe

Customers who might choose to spend funds released through their LTM on discretionary expenses like vehicles or holidays, advisers should make sure they:

take their personal circumstances into account
are aware of how long interest might roll up for on their loan.

This is to provide more clarity on interest roll-up risk, when taking a product at a younger age for a longer period.

We’ve further refined the section setting out who the product may not be suitable for by clarifying points like means-tested benefit eligibility.

We clearly set out where products may not be appropriate, including situations where:

alternative solutions may better meet customer needs
eligibility for means-tested benefits could be affected
the intended use of funds may lead to disproportionate long-term costs

Supporting distributors

This approach is designed to support distributors in meeting their responsibilities under the Consumer Duty, ensuring products are used in line with their intended target market and continue to deliver good customer outcomes.

Distributors should reflect these principles within their advice frameworks and governance processes to support appropriate and consistent customer recommendations.

FAQs

The Consumer Duty is a very significant piece of regulation that sets higher expectations for the standard of care firms across the financial services industry give to consumers.

It was described by the FCA as a “paradigm shift” in its expectations of firms in retail markets. Its purpose is to drive cultural change and instil consumer trust and confidence. It introduces a new Principle that “A firm must act to deliver good outcomes for retail customers”.

Consumer Duty was an essential change in UK regulation as it is part of the FCA's three-year strategy to deliver better customer outcomes. It will become crucial to its supervision, enforcement, and authorisation approach. This also emphasises that the FCA now wants an increased focus on outcomes for customers rather than a narrow focus on principles and rules.

This means that the FCA now expects a higher standard of care, based on the concept of reasonableness to deliver good outcomes, avoid causing foreseeable harm and remedying harm to customers where this occurs.

This new duty is relevant for all firms who are authorised under the Payment Services Regulations 2017 (PSRs), Financial Services and Markets Act 2000 (FSMA), and the E-Money Regulations 2011 (EMRs).

It applies to “retail market business” carried on with “retail” customers. It applies to existing products or services which are still being sold to customers or renewed, and also to closed products or services. It also applies to prospective customers and customers with whom a firm does not have a direct client relationship.

A new Principle that ““A firm must act to deliver good outcomes for retail customers”.
Three new cross cutting rules; Act in good faith towards customers, avoid foreseeable harm and Enable and support customers to go after their financial objectives. These Cross-cutting rules have been created by the FCA to ensure greater clarity on their expectations under the duty.
Four Outcomes areas that represent key elements of the firm-consumer relationship which are instrumental in helping to drive good outcomes for customers; Products and services, Price and value, Consumer understanding and Consumer support.

We responded to the FCA discussion paper and consultation back in February 2022. Then we completed a gap analysis that helped us understand their impact on our business. That fed directly into our current Consumer Duty implementation programme. We’ve reported our implementation plans to the relevant Boards and appointed a Non-Executive Director Consumer Duty Champion.

We have identified and begun addressing several challenges ahead of the April and July 2023 deadlines. These include:

Our Product Lifecycle Management (PLM) process: This process governs how we design, develop and manage our products. We’ve already updated it to reflect the enhanced requirements of the Consumer Duty. We regularly review our products and services to make sure they’re competitive, effective, and fit for purpose.
Monitoring price and value: We have robust measures in place that govern how we manage and monitor the price and value of our products. We have reviewed and updated our value for money framework and are currently completing our fair value assessments so we can supply the information that distributors will need from us by the end of April.
Boosting customer understanding and support: We have reviewed customer touchpoints across our new business and post-sale journeys to understand customer outcomes and improve how we communicate with and support our customers. So, we’re reviewing the content of our communications and what we send at different points in the customer journey. We are currently testing our communications where appropriate.
Improving customer outcomes: We’re looking at customer outcomes across our end-to-end journeys and defining what sort of evidence we’ll need to monitor and report on them. We’ll also need to be able to request that kind of information from distributors and share it with third parties.

The breadth and scope of the new requirements mean that we’ll need to:

work closely with our distributors and suppliers to collectively deliver good customer outcomes
carefully consider the data and management information we receive and share across our customer journeys, ensuring greater transparency and the right levels of oversight across all parts of the distribution chain
continue to engage with the regulator and other stakeholders during the iterative implementation period, supporting industry-wide best practice.

Further information

If you have any questions about how the Consumer Duty requirements affect your firm, we suggest you:

review the FCA website fca.org.uk/firms/consumer-duty
contact your network or compliance provider

If you have any questions about our response to the new Consumer Duty, please email us at: consumerduty@landghomefinance.com

Target market

Section one: Our target market requirements

	Target market	Unsuitable customers
Age	The Product is available from any age from 55 to 90. We would expect most new customers to fall in the middle of this range. However, the product is suitable for customers at both the younger and older ends of the range.	Customers who are under the age of 55 or over the age of 90.
Number of applicants	The product is available to single or joint applicants. A significant proportion of the later life population are single, with market data indicating that c.40–42% of new lifetime mortgages are taken on a single life basis. We would therefore expect a meaningful proportion of our customer base to consist of single life borrowers. The mix of single and joint applicants will vary depending on individual customer circumstances, with the relative competitiveness of interest rates and LTVs likely to influence adviser placement decisions.	Any more than two applicants. Anyone listed on the property deeds must be a party to the LTM.
Property value	Customers must have a main residence property of standard construction worth at least £70,000 (£100,000 for flats, maisonettes and ex-local authority). In general, we expect customer property values to align with typical regional housing markets, recognising that values will naturally be higher in areas such as London and the South East.	Customers whose property is valued below £70,000 (£100,000 for flat, maisonettes and ex-local authority).
Residence	Customers must be resident in England, Wales or Mainland Scotland (not Northern Ireland). Lending distribution is expected to broadly reflect where advisers operate and place business, and may therefore be weighted towards regions with higher concentrations of adviser activity.	Customers who are not resident in England, Wales or Mainland Scotland.
Tax status	Are of any tax status.	N/A
Health status	Are of any health status. However, we recognise that the product can be used as an important solution for those managing care and health related costs. Whilst customers using the product for care or health purposes currently represent a small proportion of overall lending, these cases typically involve customers over the age of 70. This reinforces the flexibility of the product in supporting later‑life financial planning, including where health‑related needs arise.	N/A
Financial understanding	Are of all levels of financial understanding however, customers must understand the impact that compounding interest will have on their remaining equity. And that this will reduce the value of their estate. They must be willing to take financial and legal advice and be willing to pay the upfront costs to take out a lifetime mortgage and have explored and rejected other forms of borrowing and downsizing. Customers must also understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.	Those who fail to understand the impact that compounding interest will have on their remaining equity. And fail to understand that this will reduce the value of their estate. Customers who are unwilling to take financial and legal advice and are unwilling to pay the upfront costs to take out a lifetime mortgage. Customers who have not explored and rejected other forms of borrowing and downsizing. Customer who do not understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.

Section two: Customer needs and objectives

We have set out below details of circumstances in which the products may be suitable, based on the customers individual needs and objectives.

The inclusion of a drawdown facility, and the amount made available, should be determined by the adviser based on the individual customer’s needs, objectives, and circumstances. Where appropriate, a drawdown facility can provide flexibility by allowing customers to access funds as and when required. However, the facility is not suitable for all customers and should only be recommended where there is a clear and demonstrable need, with the level of facility tailored accordingly.

Customer circumstances	Customer needs and objectives
Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases (note this is not an exhaustive list of borrowing reasons)	Customers who are property asset rich, but cash poor, meaning the customer has limited income available and have no ability to commit to regular payments. But recognise that they can make Optional Partial Repayments to reduce the roll up of interest Are using the money for gifting Are seeking funds to boost their standard of living to deliver a more comfortable retirement Are wanting to make significant purchases such as a new vehicle, holidays, property (taking into consideration the personal circumstances of the customer and the time interest will roll-up on the loan) Are wealthy customers considering their holistic retirement planning
Customers needing to borrow to achieve financial stability	Have limited or uncertain income, meaning they are unable to service a more traditional mortgage or service short term lending (unable to pass affordability assessments), and want to make essential changes beyond their available means Need support for everyday living costs Are in need of funds for their domiciliary care needs Customers who need to make essential home improvements or adaptations to make their home more suitable Are looking to repay existing debts

Customer circumstances

Customer needs and objectives

Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases

(note this is not an exhaustive list of borrowing reasons)

Customers who are property asset rich, but cash poor, meaning the customer has limited income available and have no ability to commit to regular payments. But recognise that they can make Optional Partial Repayments to reduce the roll up of interest
Are using the money for gifting
Are seeking funds to boost their standard of living to deliver a more comfortable retirement
Are wanting to make significant purchases such as a new vehicle, holidays, property (taking into consideration the personal circumstances of the customer and the time interest will roll-up on the loan)
Are wealthy customers considering their holistic retirement planning

Customers needing to borrow to achieve financial stability

Have limited or uncertain income, meaning they are unable to service a more traditional mortgage or service short term lending (unable to pass affordability assessments), and want to make essential changes beyond their available means
Need support for everyday living costs
Are in need of funds for their domiciliary care needs
Customers who need to make essential home improvements or adaptations to make their home more suitable
Are looking to repay existing debts

Section three: The product may not be suitable for customers

For whom lending to means we are unable to meet our regulatory duties as a responsible lender
Who are able to access alternative borrowing solutions
Who do not want to reduce the equity in the property and ultimately the value of their estate to pass on
Who are in receipt of means tested benefits that could be affected by taking this product
Who are using the product for discretionary spending early in retirement where discretionary spending may have a greater impact on the total loan amount over time
Who may want to use their equity for further investment and not for personal use; the return on their investment could be considerably lower than the interest charged on a compounding basis on the lifetime mortgage

Section one: Our target market requirements

	Target market	Unsuitable customers
Age	The product is available from any age from 55 to 90. We would expect most new customers to fall in the middle of this range. However, the product is suitable for customers at both the younger and older ends of the range.	Customers who are under the age of 55 or over the age of 90.
Number of applicants	The product is available to single or joint applicants. A significant proportion of the later life population are single, with market data indicating that c.40–42% of new lifetime mortgages are taken on a single life basis. We would therefore expect a meaningful proportion of our customer base to consist of single life borrowers. The mix of single and joint applicants will vary depending on individual customer circumstances, with the relative competitiveness of interest rates and LTVs likely to influence adviser placement decisions.	Any more than two applicants. Anyone listed on the property deeds must be a party to the LTM.
Property value	Customers must have a main residence property of standard construction worth at least £70,000 (£100,000 for flats, maisonettes and ex-local authority). In general, we expect customer property values to align with typical regional housing markets, recognising that values will naturally be higher in areas such as London and the South East.	Customers whose property is valued below £70,000 (£100,000 for flat, maisonettes and ex-local authority).
Residence	Customers must be resident in England, Wales or Mainland Scotland (not Northern Ireland). Lending distribution is expected to broadly reflect where advisers operate and place business, and may therefore be weighted towards regions with higher concentrations of adviser activity.	Customers who are not resident in England, Wales or Mainland Scotland.
Tax status	Are of any tax status.	N/A
Health status	Are of any health status. However, we recognise that the product can be used as an important solution for those managing care and health related costs. Whilst customers using the product for care or health purposes currently represent a small proportion of overall lending, these cases typically involve customers over the age of 70. This reinforces the flexibility of the product in supporting later‑life financial planning, including where health‑related needs arise.	N/A
Financial understanding	Are of all levels of financial understanding however, customers must understand the impact that compounding interest will have on their remaining equity. And that this will reduce the value of their estate. They must be willing to take financial and legal advice and be willing to pay the upfront costs to take out a lifetime mortgage and have explored and rejected other forms of borrowing and downsizing. Customers must also understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.	Those who fail to understand the impact that compounding interest will have on their remaining equity. And fail to understand that this will reduce the value of their estate. Customers who are unwilling to take financial and legal advice and are unwilling to pay the upfront costs to take out a lifetime mortgage. Customers who have not explored and rejected other forms of borrowing and downsizing. Customer who do not understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.

Section two: Customer needs and objectives

We have set out below details of circumstances in which the products may be suitable, based on the customers individual needs and objectives.

Customer circumstances	Customer needs and objectives
Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases (note this is not an exhaustive list of borrowing reasons)	Have some available income and therefore expect to make regular payments to service some, or all, of the monthly interest for at least a proportion of the mortgage Are wanting to reduce the effects of interest roll up by making monthly interest payments Are using the money for gifting Are seeking funds to boost their standard of living to deliver a more comfortable retirement Are wanting to make significant purchases such as a new vehicle, holidays, property (taking into consideration the personal circumstances of the customer and the time interest will roll-up on the loan) Are wealthy customers considering their holistic retirement planning
Customers needing to borrow to achieve financial stability	Are interest-only mortgage customers looking to pay off their IO mortgage balance with the funds released from the lifetime mortgage and don’t have the income to qualify under a residential mortgage affordability assessment Need certainty of fixed monthly payments, and value the guarantee that should they, at any time, not be able to afford the monthly interest payments that they can convert to interest roll-up and remain in their home Are looking to repay existing debts.

Customer circumstances

Customer needs and objectives

Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases

(note this is not an exhaustive list of borrowing reasons)

Have some available income and therefore expect to make regular payments to service some, or all, of the monthly interest for at least a proportion of the mortgage
Are wanting to reduce the effects of interest roll up by making monthly interest payments
Are using the money for gifting
Are seeking funds to boost their standard of living to deliver a more comfortable retirement
Are wanting to make significant purchases such as a new vehicle, holidays, property (taking into consideration the personal circumstances of the customer and the time interest will roll-up on the loan)
Are wealthy customers considering their holistic retirement planning

Customers needing to borrow to achieve financial stability

Are interest-only mortgage customers looking to pay off their IO mortgage balance with the funds released from the lifetime mortgage and don’t have the income to qualify under a residential mortgage affordability assessment
Need certainty of fixed monthly payments, and value the guarantee that should they, at any time, not be able to afford the monthly interest payments that they can convert to interest roll-up and remain in their home
Are looking to repay existing debts.

Section three: The product may not be suitable for customers

For whom lending to means we are unable to meet our regulatory duties as a responsible lender
Who are able to access alternative borrowing solutions
Who are in receipt of means tested benefits that could be affected by taking this product
Who are using the product for discretionary spending early in retirement where discretionary spending may have a greater impact on the total loan amount over time (depending on how much interest is paid, and for how long)
Who may want to use this equity for further investment and not for personal use; the return on their investment could be considerably lower than the interest charged on a compounding basis on the lifetime mortgage

Section one: Our target market requirements

	Target market	Unsuitable customers
Age	The product is available to customers aged 50 to 75. Because it requires customers to meet affordability criteria, we expect it to appeal more to a younger audience compared with other Lifetime Mortgage products. Although the product remains suitable for customers towards the upper end of the range where affordability can still be demonstrated.	Customers who are under the age of 50 or over the age of 75.
Number of applicants	The product is available to single or joint applicants. However, we expect that the product will appeal to a greater proportion of joint borrowers where other forms of borrowing may be unsuitable due to the first death stress.	Any more than two applicants. Anyone listed on the property deeds must be a party to the LTM.
Property value	Customers must have a main residence property of standard construction worth at least £70,000 (£100,000 for flats, maisonettes and ex-local authority). We expect the average house price of our customers to be in the region of £370,000. This is above UK national average and attributable to the fact that the release amount is directly linked to property value.	Customers whose property is valued below £70,000 (£100,000 for flat, maisonettes and ex-local authority).
Residence	Customers must be resident in England, Wales or Mainland Scotland (not Northern Ireland). Lending distribution is expected to broadly reflect where advisers operate and place business, and may therefore be weighted towards regions with higher concentrations of adviser activity.	Customers who are not resident in England, Wales or Mainland Scotland.
Tax status	Are of any tax status.	N/A
Health status	Are of any health status.	N/A
Financial understanding	Are of all levels of financial understanding however, customers must understand that there is a requirement for them to maintain interest payments for their payment term. They must also understand impact that compounding interest will have on their remaining equity. And that this will reduce the value of their estate once they stop making interest payments. Customers must also understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.	Customers who do not understand that there is a requirement for them to maintain interest payments for their payment term. Customers who do not understand the impact that compounding interest will have on their remaining equity. And that this will reduce the value of their estate once they stop making interest payments. Customers who do not also understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.

Section two: Customer needs and objectives

We have set out below details of circumstances in which the products may be suitable, based on the customers individual needs and objectives.

Customer circumstances	Customer needs and objectives
Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases (note this is not an exhaustive list of borrowing reasons)	Have a sustainable income and can pass an affordability assessment for the duration of the payment term Are wanting to reduce the effects of interest roll up by making monthly interest payments Would like the certainty of fixed monthly payments for the duration of the payment term, and like the reassurance that once it comes to an end, they won’t have to make any more mortgage payments and can remain in their home Are using the money for gifting Are seeking funds to boost their standard of living to deliver a more comfortable retirement Are wanting to make significant purchases such as a new vehicle, holidays, property (taking into consideration the personal circumstances of the customer and the time interest will roll-up on the loan) Are wealthy customers considering their holistic retirement planning
Customers needing to borrow to achieve financial stability	Are interest-only mortgage customers looking to pay off their IO mortgage balance with the funds released from the lifetime mortgage and do not qualify for a residential mortgage or other forms of borrowing Are looking to repay existing debts

Customer circumstances

Customer needs and objectives

Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases

(note this is not an exhaustive list of borrowing reasons)

Have a sustainable income and can pass an affordability assessment for the duration of the payment term
Are wanting to reduce the effects of interest roll up by making monthly interest payments
Would like the certainty of fixed monthly payments for the duration of the payment term, and like the reassurance that once it comes to an end, they won’t have to make any more mortgage payments and can remain in their home
Are using the money for gifting
Are seeking funds to boost their standard of living to deliver a more comfortable retirement
Are wanting to make significant purchases such as a new vehicle, holidays, property (taking into consideration the personal circumstances of the customer and the time interest will roll-up on the loan)
Are wealthy customers considering their holistic retirement planning

Customers needing to borrow to achieve financial stability

Are interest-only mortgage customers looking to pay off their IO mortgage balance with the funds released from the lifetime mortgage and do not qualify for a residential mortgage or other forms of borrowing
Are looking to repay existing debts

Section three: The product may not be suitable for customers

For whom lending to means we are unable to meet our regulatory duties as a responsible lender
Who are able to access residential mortgage products or Retirement Interest Only mortgage
Who are able to access alternative borrowing solutions
Who are in receipt of means tested benefits that could be affected by taking this product
Who may want to use this equity for further investment and not for personal use; the return on their investment could be considerably lower than the interest charged on a compounding basis on the lifetime mortgage

Section one: Our target market requirements

	Target market	Unsuitable customers
Age	The product is available from any age from 55 to 90. We would expect most new customers to fall in the middle of this range. However, the product is suitable for customers at both the younger and older ends of the range.	Customers who are under the age of 55 or over the age of 90.
Number of applicants	The product is available to single or joint applicants. We would expect a mix of both sole and joint applications, reflecting a range of customer circumstances in later life. Suitability will depend on individual affordability and financial needs, and whether the mortgage is being taken on a single or joint basis.	Any more than two applicants. Anyone listed on the property deeds must be a party to the RIO.
Property value	Customers must have a main residence property of standard construction worth at least £70,000 (£100,000 for flats, maisonettes and ex-local authority). In general, we expect customer property values to align with typical regional housing markets, recognising that values will naturally be higher in areas such as London and the South East.	Customers whose property is valued below £70,000 (£100,000 for flat, maisonettes and ex-local authority).
Residence	Customers must be resident in England, Wales or Mainland Scotland (not Northern Ireland). Lending distribution is expected to broadly reflect where advisers operate and place business, and may therefore be weighted towards regions with higher concentrations of adviser activity.	Customers who are not resident in England, Wales or Mainland Scotland.
Tax status	Are of any tax status.	N/A
Health status	Are of any health status. So long as customers can continue to meet their contractual monthly payments for the term of the mortgage	N/A
Financial understanding	Are of all levels of financial understanding however, customers must understand that there is a requirement for them to maintain interest payments for the duration of the mortgage term. Customers must also understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.	Customers who do not understand that there is a requirement for them to maintain interest payments for the duration of the mortgage term. Customers who do not also understand that they’re accepting an interest rate which is fixed for the life of the mortgage and won’t go down, even if interest rates fall in the future.

Section two: Customer needs and objectives

We have set out below details of circumstances in which the products may be suitable, based on the customers individual needs and objectives.

Customer circumstances	Customer needs and objectives
Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases (note this is not an exhaustive list of borrowing reasons)	Are still working or are retired and have sufficient income / pension income to afford the monthly interest payments Would like the certainty of fixed monthly payments for the duration of the mortgage Are using the money for gifting Are seeking funds to boost their standard of living to deliver a more comfortable retirement Are wanting to make significant purchases such as a new vehicle, holidays, property Are wealthy customers considering their holistic retirement planning
Customers needing to borrow to achieve financial stability	Are interest-only mortgage customers looking to pay off their IO mortgage balance Are looking to repay existing debts Customers who require the certainty of an interest rate fixed for the life of the mortgage Require the certainty of a regular monthly mortgage payment to pay the interest owed in line with their past mortgage experience

Customer circumstances

Customer needs and objectives

Customers wanting to borrow to achieve personal financial objectives or for aspirational purchases

(note this is not an exhaustive list of borrowing reasons)

Are still working or are retired and have sufficient income / pension income to afford the monthly interest payments
Would like the certainty of fixed monthly payments for the duration of the mortgage
Are using the money for gifting
Are seeking funds to boost their standard of living to deliver a more comfortable retirement
Are wanting to make significant purchases such as a new vehicle, holidays, property
Are wealthy customers considering their holistic retirement planning

Customers needing to borrow to achieve financial stability

Are interest-only mortgage customers looking to pay off their IO mortgage balance
Are looking to repay existing debts
Customers who require the certainty of an interest rate fixed for the life of the mortgage
Require the certainty of a regular monthly mortgage payment to pay the interest owed in line with their past mortgage experience

Section three: The product may not be suitable for customers

For whom lending to means we are unable to meet our regulatory duties as a responsible lender
Who are able to access residential mortgage products
Who are able to access alternative borrowing solutions
Who are in receipt of means tested benefits that could be affected by taking this product

Regulatory updates

We have developed a comprehensive and robust assessment process which evaluates several aspects of our business to determine the value of our mortgage product. This analysis is used to ascertain whether the Product delivers fair value for customers.

The outcomes of the assessment process are presented to Senior Managers, allowing for challenge and further investigation before we sign-off the outcomes and share the summary of our assessment with you.

The review has considered:

The range of features that the Product provides, the quality of the Product, the level of customer service that is provided and any other features that the Product may offer
The interest rates, fees and charges customers pay for the Product, comparable market rates, advice fees paid to intermediaries and non-financial costs associated with operating the Product
The cost of funding the Product and any other reductions in costs to the customer made possible by economies of scale
Any limitations on the scope and service we provide or the features of the Product