Secured loans and the FCA – one industry, one rule


September 5, 2014

Darrell Walker is head of intermediary at The Lending Wizard 

It’s been an eventful year so far for brokers and lenders, with the Mortgage Market Review (MMR) shaking up the mortgage market and the Financial Conduct Authority (FCA)’s oversight of the consumer credit industry causing a stir. Although widely considered to be two largely unrelated initiatives, when viewed together, the significance of both is obvious. 

Traditionally, there has been reluctance from many brokers to look at secured lending as a viable alternative to re-mortgage products. Intermediaries have cited a number of reasons, including nervousness around the compliance implications of secured lending products, right up to a lack of understanding of secured lending altogether. However, now that all forms of secured lending come under the same FCA umbrella, brokers are not only able to, but obliged to consider all options to devise the best credit solution for their customers. 

When the MMR is taken into consideration, the affordability requirements and restrictions now in place on new mortgages make it all the more important for brokers to consider all of the options and find a loan that is most closely targeted at the customer’s individual circumstances. 

It’s a trend towards secured lending that is already showing strong results. Recently quoted figures from the Secured Loan Index showed that the second charge sector is already up 33% on the first 6 months of last year. Clearly more and more brokers are considering secured lending and by bringing regulation of the secured loan sector under the auspices of the FCA, it is clear that the regulator is successfully creating ‘one mortgage market.’ 

Quite rightly, the focus of the FCA is to safeguard the consumer and within reason ensure that the most appropriate customer outcome is achieved. By giving the secured lending sector its own oversight, it is sending a very clear message to brokers that, in many cases, the appropriate outcome for a customer may well be a secured loan.

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