PTFS has bucked the trend set by the majority of networks by choosing to upskill its appointed representatives (AR) to give advice on second charge loans rather than handing off the client to a specialist broker.
Carrington (pictured) said the network analysed the levels of business its ARs write from second charge loans during the summer last year and found that while volumes were low, being able to offer second charge advice was an opportunity ARs could not afford to miss.
“By bringing secured lending into the regulated space, further advances and seconds have to be looked at alongside each other,” said Carrington. “We wanted to give our ARs the ability to continue offering further advances. If you get a request for a further advance, and your network does not allow you to advise on secured loans, at what point do you hand it off for a specialist to consider this option against a second charge if you are not able to offer advice on both products. The bigger picture is the further advance.”
The Mortgage Credit Directive (MCD) comes into force on 21 March at which time, advisers must tell clients looking to raise capital, that alongside a remortgage there is the option to take out a further advance or apply for a second charge loan.
Those advisers which refer clients interested in a second charge option to a specialist broker will no longer be able to call themselves independent advisers.
But Carrington said that allowing its ARs to retain the status of independent was not the driving force behind the decision to keep second charge advice in-house.
He said: “It was never driven by a desire to allow our advisers to remain independent, we started looking at this solution because we wanted a smooth advice process for the customer. After we’d made that decision we realised there was an implication for independence. As a happy consequence of the advice process we’ve chosen, advisers will be allowed to remain independent.”
Carrington said he expects to see advisers make a U-turn when the dust has settled on the MCD.
“The clarity over what the future will look like has meant that a number of networks have sat on the fence by creating a hand off [of advice]. Some think that they can just change the proposition but you can’t, it is a few months of work. Once the MCD rules have settled in there may be some shifting of network positions on this but it’s almost too late because firms will have already lost their independent badge.”