Let’s be honest, 2016 has been no ordinary year.
Steve Harness is commercial director at The Loans Engine
Snow may not be falling all around us, children may not be swaying, having fun just yet – after all, they should still be in school – but I don’t think we can disagree with Shakin’ Stevens too much on the fact that, ‘tis the season, love and understanding, Merry Christmas everyone.
But, enough of all that. We’ve a few weeks to go until everyone ‘breaks up’ for the holidays and arguably, December this year, is more important than in previous years past. Those hoping for a seasonal slowdown which allows them to put their feet up for most of the month are likely to be disappointed, especially in the second-charge sector which has undoubtedly now ‘found its feet’ since the introduction of the MCD in March this year, and appears to be prospering under MCOB.
So much has happened in 2016 it’s quite easy to forget the MCD – the 21 March was barely nine months ago and signified a considerable change for the second charge sector. However, so much has happened in economic, political and regulatory circles since then, that I suspect it could get lost in the ‘end of year reviews’. In any other year, such a regulatory change would tend to lead the news, but let’s be honest, 2016 has been no ordinary year.
Looking back however MCD was a momentous moment – perhaps not so much in its initial implementation, but certainly in terms of the path the second-charge market has been steered onto. The notion that seconds can somehow exist in a universe entirely of their own making has been shattered – this is a product which now has to bear comparison with other regulated solutions, and those who offer seconds have to meet the same exacting regulatory standards.
Clearly, our major focus in 2016 (and post-MCD) has been around the fees we charge to customers (reduced to £295), our engagement with advisers (particularly those who may not have considered second charges before), and the differing ways those advisers can use our services (to either offer the advice themselves, or refer and allow us to provide the advice). Within this we believe a fair level of customer fee is crucial.
It was not an easy decision to make, but we believe it was the right one - particularly given the statement above about bearing comparison with those products, advisers who have worked under MCOB since ‘Mortgage Day’, are familiar with. We know that many advisers have steered clear of seconds, and were of the view that, even if a second charge could help their client, a high fee would probably kill the deal for their client – emotionally, if not economically. Simply put, they saw fees as the single biggest inhibiter to business.
Therefore, moving to a fee structure that looks far more like the one advisers are used to with remortgages, for example, appeared to make sense. Certainly, in a marketplace where demand for remortgage/refinancing business is the pre-eminent driving force, then this decision seems to have been the right one. We won’t go through the tried and tested arguments here, but being able to place seconds on a level playing field with a remortgage or other types of additional finance raising, without a large fee clouding the issue, to us, can only be a good thing.
We have sought to create a proposition which enables intermediaries that wish to embrace the true spirit of MCD and take a genuinely holistic view of the finance options available – remortgage, further advance, second charge and unsecured loan – when seeking out a suitable solution for a client wishing to raise additional capital. These are early days but the results are encouraging.
And on that note, may I wish all readers a very Merry Christmas – when it comes – and a Happy New Year. In the meantime, let’s keep writing that pre-Christmas business.
