PTFS to open door for ARs to go direct to second charge lenders

The network plans to launch the panel of about three to four lenders in the coming month and is currently in the process of finalising the terms of business.

The additional panel, which will run alongside the firm’s master broker panel, will allow brokers to deal with lenders directly, in the same way they are currently able to in first charge market.

Head of propositions Vikki Jefferies said: “We want to continue to work with master brokers because they are still valuable for our members. But this is about giving our appointed representatives additional options to go directly to a lender.”

PTFS brokers are currently mandated to do all second charge business via a panel of two master brokers: Promise Solutions and Gateway.

This is common practice among networks, which, following the implementation of the Mortgage Credit Directive, decided not to allow their intermediaries to advise on ‘seconds’ for fear of a regulatory breach by dabbling in a corner of the market they did not fully understand.

Instead they entered commercial agreements with certain packagers, creating possible consumer detriment as a result. Analysis from Mortgage Solutions last year revealed a borrower could pay between £2,250 and £5,825 for the same loan, depending on the brokers’ network membership.

PTFS’ charges were mid-field at the time and have been dropped since, Jefferies said: “The fees vary, but our average fee is around 7% and never more than 10%.”

Growth has not happened

However, for Jefferies the real issue with seconds was the fact brokers were not particularly interested in the products themselves.

“The real question on seconds is what ability there is to grow, the anticipated growth in this sector hasn’t happened. As an industry we are still missing adviser buy in, and while they are still really busy with mainstream first charge business, second charge just isn’t a consideration,” she said.

“With new mainstream lenders’ propensity to take on more non-standard risks a full re-mortgage with additional borrowing is normally the best solution for the customer, rather than adding a second to the first charge,” she added.