In order to comply with the regulator’s guidance brokers must make borrowers aware that a secured loan may be a suitable alternative to a remortgage. Consequently they are faced with a choice of either letting the borrower make their own enquiries, referring secured loans to a master broker, or fully advising clients on whether a loan or remortgage more suitable.
We are finding that most DA brokers, fiercely protective of their own business by nature, are choosing the latter option and, indeed, this process should actually feel more comfortable to brokers as it is very similar to using a packager to place a complex mortgage. The broker will control the sale and advise on the first and second charge products available while the master broker is used simply to find the a suitable secured loan product.
Unlike the mortgage scenario, the second charge packager will currently need to have more direct contact with the client to satisfy the lenders requirements but this doesn’t stray in to the advice process.
If you choose to take the referral option the responsibility for the loan sold lies firmly with the master broker but a duty of care to your client would suggest you keep track of the loan that is offered so you can be satisfied that it is still suitable compared to any remortgage option you may have available.
Regardless of the option you choose, you’ll need to make sure you partner with a reliable and reputable firm. Make sure it has a whole of market secured loan proposition (circa 20 lenders), its compliance processes nailed down and a willingness to help you with any compliance questions.
There is no reason to be nervous about offering secured loans. Referral is easy and owning the advice is what you do already so don’t let unnecessary trepidation stop you from getting ahead of the game and tapping into a substantial income stream whilst properly servicing your clients.
Steve Walker is managing director of secured loan master broker Promise Solutions