Just over a third (35%) of respondents to a Mortgage Solutions poll said they planned to refer any requests for secured loans to a third party provider, while 42.5% said they had not yet started training to conduct business in this space.
It appeared that more brokers were unprepared than those who claimed to be ready as just 22.5% said they had started training to hit the deadline of 21 March 2016 set by the Financial Conduct Authority.
From this date, brokers will be subject to new disclosure obligations, meaning that customers must be better informed of all alternative finance options available to them including second charge loans. However, if a client chooses to opt for a second charge loan over a remortgage, for example, brokers are not obliged to advise on this transaction but can refer the business on elsewhere.
Chris Fairfax, managing director at Positive Lending, said despite not seeing an increase in appetite for information regarding the implementation of MCD and its consequences from introducing brokers, the master broker was actively contacting registered intermediaries to notify them of the key proposals.
“Once a dialogue has been opened brokers are actively engaging in discussion and they tend to be most concerned about the process, timing and cost involved of moving from interim permission to full permission for credit broking activity,” he said.
“There appears to be a significant lack of knowledge surrounding how a secured loan should be sold post March 2016 when intermediaries may have the option to apply directly to providers without the need for using a packager. Most, for example, are unaware that post-MCD secured loan consideration period will be replaced by a seven-day reflection period on offer and that customers will be able to pay for fees prior to completion.”
Alan Cleary, managing director at Precise Mortgages, said the lender was also contacting the main networks to find out how they planned to operate post-MCD.
“We are working with all of our packagers to help prepare them and us,” he added.
“Some brokers have not started preparing yet because they think it is a lender issue. However, they need to decide whether to opt out of giving advice on seconds, refer to a master broker or give advice themselves.”
