Fluent warns against second charge ‘entitlement’

Ryan Bembridge

August 10, 2017

A sense of entitlement from the second charge industry after the Mortgage Credit Directive came into force has been counterproductive for the market, Fluent for Advisers’ head of intermediaries Jeff Davidson warned.

Under terms of the MCD, which came into force in March 2016, brokers have to consider seconds as an option alongside a remortgage.

But rather than acting like this gives them a divine right to business Davidson said the key is using reasoned rather than emotional arguments about what brokers should and shouldn’t do.

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Davidson said: “In the aftermath of MCD, many people in the sector believed that because secured loans were now expected to be part of the client conversation around capital raising, it would be the goose that laid the golden egg for new secured loan business.

“That sense of entitlement certainly got up the noses of many brokers I have spoken to.

“Advisers are not so easily overawed by anybody telling them what they should be doing without a valid argument.

“Our role at Fluent has been to point out where a secured loan is most appropriate and show brokers how they can make a difference for clients looking to capital raise.

“The feedback we have received and new business generated have been very positive as a result.”

Paul Flavin, managing director of broker Zing Mortgages, said: “My advisers were understandably wary of a sector of which many had little previous experience.

“Yet we were very aware of the regulator’s expectations as well as the growing clamour from certain providers that we ‘had to’ offer secured loans.

“However, to me it was important that we took the trouble to understand how secured loans could fit into our advice portfolio, rather than be bounced into it.”

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