The Intermediary – October 2026 - Flipbook - Page 60
S E C O N D C H A RG E
Opinion
Financial exclusion:
The middle ground
W
hen I talk
about financial
exclusion, I am
not necessarily
referring to
those who
lack access to basic banking facilities.
However, it is shocking to note that
according to the Government, 900,000
to 1.5 million adults in the UK lack
access to a basic bank account. 13.1
million adults (24%) experience low
financial resilience, meaning they
lack emergency savings or struggle to
meet regular financial commitments.
According to the Financial Conduct
Authority (FCA), 10% of people
have zero cash savings, and another
21% have less than £1,000 saved for
an emergency.
But the extended economic
downturn has hurt us all in one way or
another, and one of the ways that has
manifested itself is access to funding.
On the face of it, the number of
mortgage deals available sits at around
7,500, according to Moneyfacts, but
lenders are increasingly concerned
with ensuring that customers can
afford new mortgages.
Mortgage Conduct of Business
(MCOB) rules and Consumer Duty
have created the conditions in which
the entire advice chain, from clients
and their advisers through to lenders,
has become increasingly aware of
the need to assess clients in a way
that ensures the right outcomes take
precedence over simply providing
a product.
Many more applicants are already
struggling to raise capital, for
whatever purpose, and this can only
become more difficult as lenders
take a more rigorous approach
to affordability.
In my opinion, financial exclusion
relates to those who are unable to
obtain credit via conventional means
due to the tightening of criteria or a
reduction in product availability. This
situation has its roots in the aermath
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The Intermediary | October 2026
of the Covid-19 pandemic and the
subsequent economic shock unleashed
in its wake.
The good news is that there will
be instances where a second charge
solution can provide a suitable
alternative. The question that needs
to be asked is how advisers are going
to respond to requests for funding at a
time when affordability is going to be a
test, not just at the time of application
but also when the funding is in place.
In the case of debt consolidation,
there is a strong case for new finance
spread over a different timescale, oen
at a lower rate which can reduce an
applicant’s monthly outgoings and
ease the burden of trying to repay
sums which cannot currently be
supported. In addition, restructuring
debt, if used sensibly, oen enables a
customer to avoid a declining credit
profile and its consequences.
We believe that introducers and
master brokers are the first filter for
those enquiries where it is clear that
affordability is an issue, or will be
again, if a new loan is put in place.
Most advisers would admit that
they are not trained debt counsellors,
but many times find themselves with
a customer who is looking for more
funding, but who, on examination,
might be beer served by not taking
out another loan and instead talking
to creditors about mutually agreed
payment plans or even seeking advice
on bankruptcy.
Balancing access to finance with responsible lending
LAURA THOMAS
is regional sales manager
at Equifinance
That said, structured debt solutions
can and do have long-term effects
on the customer’s future lifestyle
and aspirations. It is likely that
they should only be considered in
circumstances where all other options
have been discounted.
It can be difficult to find the right
balance. Given the parlous state of
the economy and the pressure on
jobs, the next few years will see an
increase in requests for capital raising
and advisers are going to have to be
particularly careful at assessing the
viability of each case.
Lenders are here to lend, and
ultimately, the responsibility for
making a mortgage offer lies with
them, provided the applicant has
given their adviser a full picture of
their past and present situation.
Our role as lenders and advisers is to
try and ensure that the door to finance
remains open to everyone, while
ensuring that our customers are fully
aware of the pros and cons. Our help
is going to be needed now more than
ever, and we need to be alive to the
responsibility we all bear to do the best
we can for our customers. ●
