The battle lines have been drawn as the issue of independence reaches the mortgage market.
In providing independent advice, a firm should not be restricted by product provider and should also be able to objectively consider all types of retail investment products that are capable of meeting the investment needs of a retail client.
These were the words of the former FSA six months before it introduced the Retails Distribution Review for IFA’s. The independent versus restricted debate was fiercely contested and firms took pride in demonstrating they could consider the whole of market.
The mortgage market has not had to confront such an issue – until now. As part of the Mortgage Credit Directive, which comes into effect this month, the second charge market will become fully regulated. The rules state that, where a client wishes to increase borrowing, they must be made aware that a second charge loan could be more appropriate that a remortgage or further advance. Brokers do not have to advise on seconds but, if they choose not to, they cannot describe themselves as “independent”.
In an ideal world this would be a straight choice between providing advice on seconds or not. The issue though is that some networks have taken the choice away from their AR’s by insisting that they do not provide advice on second charge loans and instead refer cases to a master broker.
Some brokers will pride themselves on being “independent “whether in name or when talking to customers.
The harsh truth is that the second charge lenders will not open their doors to hundreds of mortgage brokers to deal direct so in effect the majority of mortgage brokers will have to refer their cases to a secured loans master broker.
The issue of independence is still up for debate but the customer will now be getting the best advice and offered the full remit of products available.
For more help and advice please don’t hesitate to give me a call.
Until the next time Ian Chambers at Hoskin Home Loans.
Hoskin Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority number 613005. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
