At the bank we thought it would be inevitable, especially as they are now in-line with firsts in terms of the protection offered, and the fact that advisers must disclose a second when raising capital. Unfortunately this awareness has not materialised, and as such the market has not grown as much as anticipated. My thoughts for the reason behind this are that advisers are ticking the disclosure box, but not following it through to the deal.
So why are advisers so reluctant to own the deal, especially when they could be losing out on business? Some fear that the process behind seconds is vastly different. The fact is that it’s completely aligned to that of a first. Customers experience the exact same journey; from the initial IDD [Initial Disclosure Document] to the seven-day reflection period. So the theory is that, if advisers know how to process a first charge mortgage – which they do every day, they should know how to process a second.
Many believe that the only route to a lender for a second is via a master broker. For many this is the case, especially where an adviser is an appointed representative of a network. However this is not necessarily a bad thing as it offers the customer a good journey. If your research has identified that a second is the best outcome for the customer, why would you not place a customer in the hands of a master broker who specialises in seconds, can offer advice in a market they are competent in, where they have existing relationships and know the criteria? As well as this, the adviser is remunerated for the introduction and they get to retain the customer’s business (including ancillary products) going forward. It’s a win-win for both the customer and the adviser.
This isn’t the only option, however. Some lenders have opened their doors and will accept direct business as the master broker route isn’t for all. The point to make here is that one size doesn’t fit all. However you wish to place second charge mortgage business – there should be a route for you.