Just how much does it take to persuade the broking community that secured loans really do provide one of the most powerful tools in the lending armoury to help clients raise funds? Clearly waterboarding is off the table as well as the fact that it plays havoc with the office carpet. However, having been a champion of the secured loan since I went into long trousers, I look at the proposition on offer in our regulated, customer orientated 21st century lending environment and wonder what I and my peers across the industry need to do to show the world that a remortgage should not be a default position. In fact it could very well be detrimental to the health of clients.
OK, secured loans are making progress, because new business figures do not lie. Every indicator shows that secured loan lending is increasing month on month and demonstrating a strong annual upward trend. But the continuing challenge is to give more intermediary practitioners every reason to value the benefits that secured loans can provide for their clients.
I want to persuade every broker faced with a capital raising request to at least provide a secured loan alternative to every client and let them judge the merits. A remortgage has been the go to answer for so long that it has become a reflex and I cannot blame brokers for going for what they consider to be the tried and trusted answer. There is no denying it has served many clients well. But while the solution might have worked yesterday, do we question whether it is still as appropriate today when the game has changed so much?
I am sure it cannot have escaped anyone’s notice the seismic changes which have taken place in the mainstream first charge market. Not only has borrowing become more restricted by lack of appetite, but also many lenders have chosen to interpret the words of the regulator, on the question of interest only and affordability, in such a way that many clients are now definitely at a disadvantage in considering a remortgage.
However, help for the cause is at hand from an unexpected quarter. While I and my peers continue to bang the drum for secured loans, the regulator will also be asking questions of brokers if secured loans do not appear as part of every client’s written review prior to a recommendation on capital raising. With secured loans coming under the FCA’s purview next year, you can be sure they will be expecting to see that advisers have explored every avenue.
Bradley Moore is head of secured loans at Brightstar Financial
