The Intermediary – September 2026 - Flipbook - Page 66
SPECIALIST FINANCE
Opinion
Good advice doesn’t
end with the loan
A
s Consumer Duty
celebrates its third
anniversary, it is clear
that expectations
have changed.
Regulatory focus on
implementation in those early years
has shied to action and evidence.
Not only is the regulator clearer
on its expectations of firms, but the
level of scrutiny has increased. It is no
longer enough for firms to say they
deliver good outcomes, they must be
able to prove it. Recent correspondence
from the Financial Conduct Authority
(FCA) has not only challenged firms
on their processes, but their ability
to demonstrate, through evidence,
that they are making a meaningful
difference to customer outcomes.
But it’s not just the regulator that
is watching. While the FCA has
opened investigations into potential
breaches of the Duty, it has also
seen record numbers of industry
whistleblowing complaints relating to
the new regulation.
In short, the sector is rising to meet
its requirements, identifying poor
practices within their distribution
chains and creating a self-policing
model. The need for robust evidence
of good customer outcomes has never
been so crucial.
As we enter this new phase of
maturity, it’s up to firms to respond
– particularly those advising on
renovation finance.
Stalls and shortfalls
Renovation projects live or die by
casflow. Contractors need paying,
materials must be purchased and
unexpected costs inevitably arise. If
funding is delayed by retrospective
valuations, projects can quickly stall.
At that point, Consumer Duty moves
from being a compliance exercise to a
real-world customer outcome.
The FCA’s rules require firms to act
in good faith, avoid foreseeable harm
and support customers in achieving
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The Intermediary | September 2026
their financial objectives. Few lending
scenarios test these principles more
thoroughly than renovation finance.
A funding structure that appears
suitable when an application is
submied can become problematic
months later if payment timings fail to
match construction costs. Delays can
trigger additional borrowing, contract
disputes, rising build costs and in
extreme cases abandoned projects.
These aren’t hypothetical risks, they’re
entirely foreseeable.
That means advisers should
be considering not just whether
finance is available but whether the
structure of the finance gives clients
the best chance of completing their
project successfully.
One of the biggest opportunities
to improve customer outcomes
lies in how staged payments are
delivered. Traditional valuationbased lending introduces uncertainty
because each drawdown depends
on a surveyor’s assessment of work
already completed. Clients oen don’t
know exactly how much funding will
be released until the valuation has
taken place.
Cost-stage payment lending offers
a different approach by releasing
funds against agreed build costs rather
than relying solely on retrospective
valuations, meaning borrowers gain
far greater certainty over project
cash flow.
That doesn’t simply make life
easier for the client, it also creates a
funding strategy that is beer aligned
with the customer’s stated objective,
completing their renovation on time
and within budget.
Practical understanding
Another area where refurbishment
lending deserves greater aention
is consumer understanding. Even
experienced property owners can
struggle to appreciate the practical
differences between valuation based
and cost-based funding, how stage
CHRIS MARTIN
is head of product development
and lender relationships
at BuildLoan
payments work or the consequences of
cash flow interruptions during a build.
For advisers, that creates an
obligation that goes well beyond
product selection. Clients need
to understand how their finance
will operate throughout the
project, and documenting those
conversations has become just as
important as documenting the
recommendation itself.
Specialist renovation finance
distributors, like BuildLoan, can
assess build costs, model project cash
flow and identify funding structures
that beer align with both the client’s
objectives and Consumer Duty
expectations.
In an environment where firms
are now expected to evidence
robust processes that help deliver
good customer outcomes, an
additional layer of due diligence is
increasingly valuable.
Three years on from the launch
of Consumer Duty, the regulation
is no longer about implementation,
it’s about maturity. The firms that
stand out won’t be those who ‘talk’
about good customer outcomes, but
those with the processes in place to
identify potential risks and evidence
that they are delivering good customer
outcomes in practice.
Renovation finance is one of those
areas when projects depend on precise
funding schedules rather than purely
loan advice. A recommendation
cannot end with merely selecting
a product.
Advisers also need confidence that
the funding strategy will work from
the first contractor invoice to the final
sign off.
Ultimately that’s what Consumer
Duty has always been about. ●
