FCA second charge investigation ‘needs to happen’ – Clever Lending

Kirtikar also noted that the majority of second charge customers wanted to pay fees at the end of their transaction, rather than upfront.

However, he urged master brokers to be more transparent with their fees and to be fairer to customers.

Clever Lending launched two fee options in November where customers can either pay upfront while making the application, or wrap all the charges together and add the total to the final loan.

Kirtikar told Specialist Lending Solutions that the latter option was proving more popular so far.

“It’s only in cases where it’s more of a luxury and getting a second charge and they pay the upfront fees,” he said.

“If it’s a home improvement or debt consolidation then most don’t want to pay out the fees early on, so that’s why they choose the second option.

“We are seeing the other option being taken-up sometimes, but around 75% of our customers choose the maximum £2,495 on completion,” he added.

Big boys transparency

The master broker explains what fees and charges are included in both fee structures to customers and urged other bigger firms to lead the way and do the same – but he believed lenders were being a positive force.

“Lenders are doing a lot of proactive things, helping to educate the market and working with us,” Kirtikar continued.

“All the master brokers and lenders are working together to help educate the market and help brokers understand there are further options there for clients.

“However, the caveat is we should be doing more to be transparent – it just needs a few of the others to take a stance on fees and go with it,” he added.

Good for the market

The FCA investigation of the second charge market has resulted in a lender workshop being held next month to address issues.

Kirtikar was supportive of the regulator’s review of the market and believes taking action on any concerning practices would only be a good thing.

“There’s no concern from us,” he said.

“We understand what’s going on, it needs to happen, we’re very relaxed in our stance on it.

“We’ve always worked very closely with lenders across the board and in this industry and I think these things are good for the market.

“Where there’s an investigation there’s often some benefit, so anything that comes out of it will be positive,” he added.