2015 was a positive year for the mortgage market in many respects and was a particularly busy one for the intermediary community. Due to changes in tax and regulation, there are challenging yet exciting times ahead for the second charge market, but without careful planning and management, intermediaries could find themselves with a real headache.
Preparing for change
There are still some intermediaries who are largely unaware of the considerations the MCD brings and those who have underestimated the regulatory changes could risk not being compliant. Intermediaries must be ready to operate under the new regime to ensure everything remains as close to business as usual as can be.
The regulatory changes have been well covered in the trades and lenders and master intermediaries have invested a huge amount in the education piece, so it does beg the question as to if you aren’t aware of the requirements now perhaps you never will be.
Second charge
Intermediaries must state their position on how they are going to advise on this particular area of the market. Some may choose to not advise at all, or may refer their clients to a third party such as Brightstar, while those electing to advise on second charge loans themselves need to adopt the rules in order to consider whether a second charge mortgage is more suitable for their client.
However, by working with specialists, intermediaries can ensure compliance while gaining access to a depth of experience and industry knowledge, gained over many years, allowing them to source the best possible products to suit their clients’ needs and circumstances. On the other hand, if the intermediary chooses not to advise on seconds, they must inform the client, and this may not aid their client retention.
Independence and technological advancements
Some intermediaries are now unable to refer to themselves as ‘independent’ as they must offer advice on every area of the market including equity release and second charge products. However, there are options available and some intermediaries have chosen to engineer it using sourcing systems while others are contracting out to master brokers.
Technological advancements such as Brightstar’s Easysource system will help overcome some degree of complexity in order to make the advice process simpler for intermediaries, while the processing changes will allow for an even closer bond between master brokers and intermediaries going forward.
A future of opportunity
Although the MCD has brought further change to our industry and is viewed by some as a compliance threat, I believe it is a great business opportunity. It is a chance to drive innovation and provide transparency in a period of new regulation and due to the very nature of the lending sector, should be viewed with measured optimism.
If intermediaries have left it to the last minute to prepare for the directive then they risk not being compliant and not being prepared could affect how they trade. It is therefore time for more intermediaries to make the necessary preparations in order to operate under the new regime and to ensure it is business as usual for the remainder of 2016 and beyond.
Bradley Moore is director of second charge loans at Brightstar Financial