What a time to be in the secured loan market. The sector has been building up a head of steam for the last twelve months and this year has seen consistent monthly rises with completion figures showing that year on year the industry is over 50% ahead of where it was in 2012.
Growth is in part due to the lending community and partly because market conditions have meant that secured loans are very much back on the agenda.
The pioneering stance of existing lenders like Shawbrook Bank, Nemo Personal Finance and Blemain Finance has helped to revitalise the sector along with the arrival of new lenders like the resurgent Prestige Finance, now under the ownership of OneSavings Bank. New lenders bring new ideas and apart from helping to provide brokers and their clients with more choice they also bring different ideas and concepts to the proposition, such as Prestige’s promotion of its large loans products.
Looking forward, while we can all applaud the upward trend in business, we do need to remember that the sector faces, in my opinion, a positive challenge because of the impending change in regulator as the Financial Conduct Authority takes over regulatory duties from the Office of Fair Trading in April 2014.
To be exact it comes into force on April Fools Day and it is up to all of us to be ready or end up being the ‘fool’. Of course, there is still a lot of uncertainty as the FCA has not been able to offer too much in the way of direction or consult widely with the industry, because a final version of the new European Mortgage Directive is still awaited.
It would be foolish however, to assume that it will be business as usual and smaller firms will need to be particularly vigilant to ensure that they are up to date on developments, if they don’t have a network or compliance team to keep them updated.
One of the more interesting titbits that the new compliance regime will definitely insist on is a role reversal after all we have done to say that brokers should always investigate the suitability of secured loans before they default to a remortgage for capital raising.
The new regime will expect that even ‘died in the wool’ finance brokers will have to ensure that before they recommend a secured loan they will have evaluated whether a further advance or remortgage is better advice. A level playing field at last?
Bradley Moore is head of secured loans at Brightstar Financial.