The secured loans sector has never been fully embraced by some mortgage brokers. The notion that the sector lacked regulation has been cited as one of the reasons for this lack of appetite from mortgage firms.
Now that both the first and second charge mortgage markets fall under the same regulator- the Financial Conduct Authority – will this increase confidence among mortgage firms to offer the products?
Loan Introducer speaks to mortgage brokers and networks to see if they think FCA regulation of the sector will lead to more mortgage firms offering second charges?
Aaron Strutt, product and communications manager at Trinity Financial:
“It is good news that the FCA has taken over regulation of the secured loans market and it will give brokers more confidence to refer clients. We have some good contacts in the loans industry although only pass over a limited amount of clients.
“Mortgage regulation is so tight that it does seem like some of the other financial sectors have been left to their own devices. With the FCA taking over hopefully this will more coherence to the debt market.”
Martin Reynolds, chief executive SimplyBiz Mortgages:
“We have been conscious of the new FCA regulation for some time and have been working on providing our members with a solution.
“Over a year ago we carried out a formal tender and due diligence process and in May we launched a panel of referral partners.
“Whilst the move into FCA regulation will provide additional comfort, to some, there is still a bigger educational need required to inform the wider intermediary market of the merits of using secured loans in the right circumstances. It should not be the natural default option but it should form part of an advisers thought process.”
Nigel Stockton, financial services director at Countrywide plc:
“Countrywide Financial Services does not offer second charge loan products. We pride ourselves on being an estate agency based distribution for mortgage products and our focus remains on prime mortgages to get Britain moving again. As a result, we would not offer second charge loan products after any change in regulation.”
David Ewing, managing director, Ingard:
“With the regulation of secured loans coinciding with MMR and the new industry take on affordability and best advice, brokers need to consider secured loans as an alternative option to remortgages.
“As a large Directly Authorised brokerage and network Ingard will be taking a proactive stance to ensure the client receives the correct advice when considering a remortgage or secured loan.
“We see it as our responsibility not only to provide the products and regulatory processes for the brokers but also to ensure they receive the correct training and support to ensure the client is treated fairly.”
Sally Laker, managing director at Mortgage Intelligence:
“Through Mortgage Intelligence’s wide distribution network, we offer a range of financial products including access to second charge loans, because we believe that there is a place for second charge loans under the right circumstances for the consumer.
“In my opinion, that should be the case with or without regulation, however, like all financial products, they should only be sold if it is the right solution for the consumer.”
David Sheppard, managing director, Perception Finance:
“Regulation by the FCA would never encourage me to do more of that type of lending but it wouldn’t discourage me to do the deals where it is the best option for the client.
“There are clients which are tied into a mortgage rate and can’t borrow any more money from their existing lender and in this instance a secured loan can for certain people be the best solution.
“Our network is still trying to establish what the boundaries are when offering secured loans under the new regulatory structure. A lot of the time secured loans are put through to a secured loan packager, so who is responsible for advice?
“There is a point where our advice stops and the packagers kicks in, so that’s a key thing.”
Andrew Montlake, director of Coreco Group:
“I don’t think FCA regulation of the market makes much difference. If a secured loan is relevant to the customer I will look into it and pass it on to a specialist.
“For me though, it’s still a knowledge thing, who regulates the market is not the issue. For me to do the loan myself I would need to know more about the market and gain experience, if I don’t have that I would rather pass it in to a specialist who does.
“If however the market is FCA regulated, then great, that can only be a good thing and help get some of the less scrupulous firms out of the market.