The MCD, which is just weeks away from implementation, will force mortgage advisers to choose if they will advise on second charge mortgages or refer cases to a master broker and lose their independent and whole of market status.
Harle (pictured) agreed that there was a fear among brokers that handing their client over to a second charge master broker meant they were losing control of the customer case.
“Some brokers also worry that master brokers will cross-sell but as long as the master broker doesn’t have a direct-to-consumer offering then I think they’re quite safe on that. Brokers do have a concern around ownership and the customer journey and if anything goes wrong then it reflects badly on them,” she said.
Harle added that many customers and mortgage brokers had a different perception of what independent and whole of market meant to the adviser community.
According to a poll carried out among Mortgage Solutions readers, 49% said calling themselves independent was ‘very important’ in helping customers determine who was whole of market. But, 33% said customers did not understand what independent meant, while 18% said the referral process was a good support mechanism for brokers.
“If brokers choose to advise on seconds just to retain their independent status, despite it not being that relevant to their customer segment, then I don’t think it’s worth the risk to their business,” added Harle. “I think firms should be thinking first about what’s best for their firm and their customer and then think about independence, but a lot of them are hung up on that status.”
Martin Reynolds, chief executive at SimplyBiz Mortgages, said mortgage brokers were likely to take a step back and observe movements in the second charge market as the MCD rules bed in over the coming months.
“I think we’re going to see a lot of change in the secured loan market in the next 12 to 18 months, whether that’s in distribution strategies or product development,” he said.
“A lot of advisers will sit and watch and see where the market moves to so they can understand what they’re giving the full advice on. At the moment there isn’t a lender offering a direct route to seconds at the moment, it’s all via the master broker. So in the short term some people might feel that it’s more prudent while the market settles to refer their cases to the master broker.”
