The Intermediary –- June 2026 - Flipbook - Page 79
S E C O N D C H A RG E
Opinion
Building a positive
reputation
LAURA THOMAS
is regional sales manager
at Equifinance
W
here do
second charge
mortgages
fit into your
portfolio of
potential
funding options for customers?
I imagine the responses will still
be mixed.
Today, many see second charge
through the prism of a historical
judgement of a sector, which, to be fair
has had its moments in the past, when
some criticism was valid.
However, others with more open
minds will have weighed up the
pros and cons and matched those
conclusions against today’s Financial
Conduct Authority (FCA) oversight of
the sector.
From the increasing use of second
charge lenders and the new business
we are generating, I can safely say
that advisers have voted in greater
numbers to support a second
charge option, where appropriate,
because reputationally they now feel
comfortable doing so. The other factor
that needs to be understood is one
of demographics.
There is greater acceptance because
a new generation of advisers is making
its presence felt. Brought up with
Consumer Duty and unencumbered
by historical hangups and motivated
by a neutral evaluation of the options,
this generation is providing the
impetus that has seen second charge
lending go from strength to strength
over the past few years.
Lessons of the past
However, having fought so hard to
gain wider acceptance among the
broker community, it is important
that the industry does its utmost to
maintain and work to further improve
the reputation of the sector.
Every lender and master broker
has a responsibility to ensure that
their offerings are consistent with
regulatory rules and also meet a more
Trust sits at the heart of second charge acceptance
personal criteria in their assessment
of lending risk for themselves, their
funders and, most importantly,
their customers.
In 2008, one of the biggest banks
in the UK market was effectively
bankrupted by the actions of its
fist charge lending arm because of
the ‘success’ of its aggressive ‘credit
light’ 100%-plus loan-to-value (LTV)
product offerings being marketed in
order to carve out a larger share in an
overheated market.
As was proved in this case, amid the
wider financial crisis powered by the
subsequent worldwide credit crunch,
just because risky products can be
created, does not mean that they
should ever see the light of day and
sensible underwriting can never be
ignored in the fight for market share.
I believe that our sector is
finally being seen as a serious
alternative lending source. In the
debt consolidation area, what it
does not need are products which
offer borrowers, regardless of
their financial problems, a too
easy way to borrow more when
their ability or intent to repay is
severely compromised.
Desperate people in debt are
vulnerable and don’t need the siren
call of yet more borrowing waved
enticingly in their faces.
If any lending sources were
prepared to ignore credit issues in
order to build market share, they
might tell themselves and introducers
they are responding to customer
The growing positive
reputation of the second
charge market was hard
won. It is up to all of us to
continue building”
needs, but are just deluding
themselves. Their funders might
like the new business at first, but as
history has taught us with high risk
lending, the growing rate of arrears
and ultimately complete default will
not be to their liking.
Though it can be aractive business
for some, advisers need to be sensitive
enough to know the difference
between using such products for
genuine debt consolidation or just
as a way of kicking the can down
the road, thereby prolonging the
customer’s fight to avoid facing up to
financial reality.
However, it is up to the whole
second charge lender community to
recognise the responsibility they share
with brokers to maintain the line
on assessing customers and keeping
product criteria at a level which helps
those who can be helped without
resorting to throwing the credit
manuals in the bin.
The growing positive reputation of
the second charge market was hard
won. It is up to all of us to continue
building on the foundations that have
been built. ●
June 2026 | The Intermediary
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