Any risks or unintended consequences to be aware of?
According to the Green Finance Institute, the green mortgage sector has increased from three to more than 50 products in recent years.
Geale spoke recently on the role of brokers: “Given the long-standing and trusted relationships mortgage intermediaries have with homebuyers, they have a really important role to play in the decarbonisation of UK homes.
“But every property is different in terms of what is feasible and viable, while every borrower has different circumstances, knowledge and abilities to pay. But we know many brokers are new to the opportunities that green mortgages provide. They’re not energy-efficiency experts, and we don’t expect them to become so.
“There is no ‘one-size-fits-all’ answer for energy efficiency. It’s not as simple as saying ‘this measure costs X amount and will deliver Y in reductions to your carbon emissions or energy bills’,” Geale continued.
“And different lenders offer different types of incentive, depending on a huge range of variables. It’s not easy to compare them, especially when some products require a jump in EPC rating, while others need a specific type of energy-efficiency improvement to be carried out.”
Brokers need to adapt to new client demands and expectations. Homeowners will be turning to brokers to help them navigate on a range of issues when it comes to home ownership, from EPCs through to understanding how retrofitting works and what materials to use.
With a market that is going to continue to grow, brokers need to ensure they are providing the right advice and also informing the client on considerations when doing work on a property.
Brokers that choose not to understand and learn will directly impact homeowners and risk them being detrimentally affected, potentially resulting in severe consequences.
There are a range of tools to support brokers such as the Association of Mortgage Intermediaries website, which brings a range of key subjects together.
We could start to see other stakeholders within the industry ensure brokers are doing the right thing in line with FCA requirements.
Lenders and valuers should work more closely as part of their survey and conduct an EPC check, which will help the lender review whether the client has been financially affected by not being recommended a green product they offer over a non-green product due to the incompetency of the broker.
What are the consumer duty considerations?
The FCA’s consumer duty, which comes into force in July, is designed to set higher and clearer standards of consumer protection across financial services and requires companies to act to deliver good outcomes for customers.
