You are here: Home - News -

Advisers express concern over MCD referral process

by:
  • 11/02/2016
  • 0
Advisers express concern over MCD referral process
Mortgage advisers outlined their concerns over the advice process for second charge mortgages ahead of the Mortgage Credit Directive (MCD) on 21 March.

Delegates at an MCD event hosted by Tenetlime raised concerns that they would be on the hook for advice in the event of referring a customer to a master broker for a second charge mortgage.

During one session, advisers queried whether they were giving the client advice by simply stating that a second charge loan was available to them.

Gemma Harle, managing director of Tenetlime, said: “If you’re going down the introducer route then the master broker is completely on the hook for the advice and then you would not have any interaction with the client or discuss the products from the point of referral. You will be informed by the master broker of what the decision was but you do not make the decision on what will be most suitable.

“If it’s not in your scope to advise on seconds then you would have discounted the first charge option and looked at that already. It may be that a second charge is suitable and in that instance you will pass the case across to the master broker.”

Harle confirmed that the process for referring on seconds meant that customers may be unaware of what products looked like until they met with a master broker.

“It is the same as a further advance, brokers do not know what lenders do with regards to further advances so they can’t inform the customer on that either,” she said.

“If the firm has decided not to advise on seconds then the adviser has to tell the customer upfront that they advise on first charge mortgages and provide them with  the list of lenders they use – which will be pretty long as most appointed representatives operate from an unlimited range. They must also tell the customer that other options maybe suitable such as a further advance or second charge but the adviser does not need to consider it.”

Customers being referred must also be given the master broker’s service document, to make it clear that the broker is introducing, Harle added.

“That is really important because otherwise the customer will get confused as to where the advice is coming from.”

There are 0 Comment(s)

You may also be interested in