This page is supposedly for market analysis, where I give you the figures for the secured loan market and how it is growing in today’s heavily regulated market place.
However, I am sure everyone who has been reading the trade press for the last 12 months now know these figures off by heart and if they do not realise that it is now an important part of the mortgage brokers portfolio of products then they are not, in my opinion, offering their clients ‘best advice’.
Dark days
It is with this in mind that I am going to give an open opinion on an article that appeared in recently in Money Marketing by Guy Anker, where the headline was ‘Inducements uncovered on second charge loans’ and an additional quote from John Charcol’s senior technicial manager Ray Boulger, which said: ‘The Financial Services Authority’s (FSA) evidence shows the market needs proper policing.’
Having read the article, it took me back to the dark days of the secured loan market when ‘everyone and their granny’ wanted to take have a go at it and we were the whipping boys of the lending industry.
In the article, which talks about mortgage lenders offering inducements to their advisers to recommend second charge loans when a remortgage or further advance is more appropriate and often cheaper.
Boulger is quoted as stating: ‘This is just another example of the abuse that goes on in the sector, and the degree of consumer detriment in the second charge market is more than in the mainstream mortgage market. It is illogical for the Treasury not to make the FSA regulate it. The buy-to-let market also needs regulation, but the second charge market should come before that in the governments list of priorities.’
I am astonished that these quotes about the whole of the second charge market can be made by someone who is meant to be one of the most knowledgeable people in the market.
We are talking about a mortgage lender who has offered these inducements, and, as the FSA spokesperson is quoted as saying: ‘The number of inducements is limited at this stage.’ We are not talking about the hard-working secured loan packagers and lenders that they represent, who, for the last 24 months especially, have invested heavily in time, money, technology, compliance (yes, compliance despite it not being regulated) and building a reputation for a market that is as important as a remortgage in the options that should be made available to clients.
Regulation
Second charges have been regulated for over 30 years (in the case of loans up to £25,000). I think he should concentrate on his own market and not make statements like, ‘should be regulated before buy-to-let’. Would this have anything to do with the fact that John Charcol is involved heavily in placing buy-to-let mortgages or is it because he knows a great deal more about the second charge market? I will leave it to you to make up your own mind.
Would it not be better for a respected industry figure like Boulger to continue trying to improve his own sector of the market, as the incidents of flaunting FSA regulations in the mortgage market that have been widely reported in the press and television programmes seems to be more than ‘limited’?
Maybe it is time the people who have a direct interest in the second charge business got together on a more regular basis to stand up for a sector of the lending industry that has an important part to play in providing products and services to the general public via the mortgage intermediary market.
In the meantime I am sure you will continue to look at secured loans as an alternative to a remortgage or further advance where appropriate, and to place it through a reputable packager who, like myself, is proud to have been involved in the secured loan industry for over 20 years.
Gerry Lafferty is sales and marketing director at Access Loans and Mortgages
