Second charge mortgage advice firms will be required to sell mortgages to the same standards as first charge firms.
Marie Grundy, managing director of V Loans, says there will be fundamental changes to the sales process, as sales of second charges will need to be on a fully advised basis.
Advisers will have to meet initial disclosure requirements and produce European Standardised Information Sheet documentation issued at various trigger points in the process.
However Ms Grundy says this also includes many positive changes such as the removal of the outdated cooling off period, the ability for borrowers to pay upfront fees, which negates additional interest charges and the changes should also offset the fee the master broker will charge for arranging the loan.
Nuala Wheeldon, compliance director of Fluent Money, says advisers will need to ensure that they make the client aware of alternative methods of raising money.
So she says although there will be no statutory requirement for advisers to quote both remortgage and second charge loan, whichever is recommended, the client must be made aware of all other alternatives.
V Loan’s Ms Grundy says all master brokers will need to be fully authorised by the FCA, incorporating mortgage permissions, to enable them to continue offering second charges under the new regulatory regime.
Advising and selling standards will be introduced from 21 March 2016, but Ms Grundy says advisers shouldn’t panic yet about these deadlines. Mortgage sellers have until 21 September 2018 to obtain the required level three qualification.
