Pan-industry approach needed to raise consumer awareness of second charge – Crewe

by: Paul Crewe, managing director of Smart Money
  • 28/11/2017
  • 0
Pan-industry approach needed to raise consumer awareness of second charge – Crewe
Way back in December 2016 research from Together suggested that 79% of people in the UK did not know what a second charge mortgage was. Of the minority who were aware, 23% of those did not understand the difference between such a loan and a remortgage.

If the same poll was taken today would this percentage be higher or lower?

It’s difficult to say.

If I was to speculate then I imagine awareness levels have improved but not by any substantial margin, and certainly not as highly as the sector warrants.

We cannot kid ourselves that second charge has always had the highest of profiles or the greatest of reputations. So we should not be too surprised that consumers, or brokers for that matter, have not fully engaged with it in the past.

 

So how can we, as a sector, enlighten more consumers?

The first step is to really champion the positive changes which have taken place in recent times. Regulation has forced all lenders and service providers to ensure even more robust procedures are in place, meaning that professional standards have drastically improved across the board.

New entrants have helped to increase the number of available options and increased competition has had a positive impact on rates and service levels. These are messages which need to be spread loudly and widely. And who better to do this than those operating at the coalface.

Even though an even brighter spotlight has been shone on second charge, this has not equated to all advisers suddenly seeing the light and becoming evangelical about its benefits.

And if the majority of brokers have not yet bought into the merits attached to this sector how can we expect consumers to?

 

Three-pronged approach

To reach more consumers it’s clear there needs to be a three-tiered approach.

Lenders and trade bodies have a big role to play in bolstering general levels of consumer confidence and awareness.

This has to be fully supported by distribution partners and conveyed simply and comprehensibly by brokers.

The FCA has outlined the need for brokers to understand how and where a second charge loan fits into the advice process, and this should be the common denominator in a joined-up approach across all links in this chain.

Strong levels of education and support remain critical in helping brokers to understand how second charge loans can compare favourably to remortgage deals (for certain clients) and in identifying lending scenarios where they are most appropriate.

It’s only when this messaging is ingrained across the whole intermediary marketplace that we will see any real impact being made on consumer awareness.

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