Comments on Bank of England MPC decision – time to focus on vulnerability
Following the Bank of England’s announcement to raise interest rates to from 3.0% to 3.5%, Andrew Gething, managing director of MorganAsh said: “Today’s decision by the MPC confirmed what many in financial services expected and had in fact already priced into fixed rates. It also hints that last month’s efforts to front-load rates with an aggressive rise of 0.75% may have been the exception rather than the new rule, especially as the base rate is predicted to peak below expectations.
“Recent indications that inflation increase is slowing is encouraging as we should see a drop in inflation quite quickly and hence release pressure to increase rates.
“Nonetheless, this further increase takes rates to their highest point in 14 years, once again driving up the cost of borrowing for stretched consumers. It also puts additional pressure on those with tracker and SVR mortgages.
“It’s situations like this where the new Consumer Duty regulation has been introduced to protect the most vulnerable. As the Bank of England takes difficult measures to bring inflation down, providers, brokers and advisers must identify those customers with vulnerable characteristics who will be most susceptible to harm. This is especially true with changing affordability, harsher criteria and tougher stress tests.
“Implementing a consistent method to assess vulnerability must become a priority for financial services firms, especially as more consumers potentially fall into this category. Not only is it essential in protecting customers and delivering good outcomes but meeting the requirements of Consumer Duty.”