Second charge market needs ‘massive cultural shift’ – Lynda Blackwell

  • 13/02/2018
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Second charge market needs ‘massive cultural shift’ – Lynda Blackwell
The second charge market is “letting the side down” and needs a “massive cultural shift” including greater transparency around master broker fees, according to former Financial Conduct Authority (FCA) mortgage manager Lynda Blackwell.

The issue of master broker fees has risen again, particularly as the FCA is understood to be taking a keen interest in the second charge sector.

Blackwell told Specialist Lending Solutions that it was essential for the sector to improve and that some master brokers needed to look at their consciences.

She said second charge master brokers should make fees more transparent to avoid customer detriment, particularly if the industry is to work on a level playing field with the first charge market.

“The second charge sector is letting the side down in terms of standards,” she said.

“Bringing second charge in-line with first charge was supposed to level the playing field in terms of standards and customer outcomes but I think we’ve still got a way to go on that account.

“In the first charge market the fees are paid by the client when they apply for the mortgage and there is openness and fairness about the fees charged. There’s no reason why that’s not the case in the second charge market,” she continued.


Look into their consciences

Blackwell lamented that this was the result of some master brokers not adapting to the new regulatory regime under the FCA.

“They still are acting as the middle man and carrying the fees till completion and then charging the customer handsomely for having done so,” she continued.

“They were not allowed to charge the customer up-front fees under the Consumer Credit Act but under the FCA rules, they can. There’s no reason today why those customers who pay and go ahead should be paying for the customers who walk away. I don’t think that’s fair; that’s not open and transparent pricing for the customer.

“Some master brokers also need to look to their consciences when it comes to some of the fees and services they are charging for. There’s a need for a wholesale cultural shift in the sector,” she concluded.

Last week Specialist Lending Solutions asked its marketwatch panel to outline the arguments for and against the current fee charging structures.

And at The Specialist Lending Event, Brightstar Financial CEO Rob Jupp defended fees, noting they had fallen 30-40% over the last year.

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