UTB: MCD was worth it for second charge

Ryan Bembridge

March 30, 2017

Buster Tolfree

The Mortgage Credit Directive has laid the foundations for future growth of the second charge sector despite being such an expense, says Buster Tolfree (pictured) of United Trust Bank.

The Financial Conduct Authority has revealed the cost of the MCD on second charge lenders and brokers and it isn’t pretty.

Lenders have spent around £330,000 on one-off compliance costs and will collectively pay £225,000 per annum, while for brokers the new regime cost £85,000 one-off and will amount to £35,000 annually.

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Tolfree, who is UTB’s commercial director of mortgages, said: “There’s no doubt in my mind that MCD has been a positive move for consumers and the industry as a whole.

“Preparing for MCD required a significant investment of time and resources by lenders and brokers alike, but it has laid firm foundations for the future growth of the sector.

“Second charges are no longer the mystic art they were perceived to be before MCD, and the process now matches first charges exactly.

“The FCA’s figures estimating the high cost of MCD to the second charge industry have not come as a surprise.”

Challenges in adapting to the new regime included IT, while firms also had to spend money on developing sales processes, HR and training.

Tolfree added: “We should not be concerned about the FLA’s figures in February reporting a 1% year on year reduction in second charge mortgage business.

“I fully expect to see notable year-on-year growth figures in the next two months as a direct result of the post MCD dip between March and May 2016.

“Furthermore, with the market looking to approach £1bn again this year, healthy competition amongst lenders, great rates for borrowers and consumer confidence and awareness of the product continuing to improve, I believe the second charge mortgage sector has a bright future.”

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