The Loans Engine has welcomed the introduction of the Mortgage Credit Directive (MCD) into the Financial Conduct Authority’s (FCA) rules and regulations, describing it as a ‘great leveller’ for the whole mortgage market.
The MCD, which came into force today brings about an EU-wide framework of conduct rules for mortgage firms. It applies equally to both first and second-charge mortgages and moves the regulation of the latter under the auspices of the FCA’s mortgage regime.
It means that any lender, administrator or broker carrying out second-charge mortgage business now has to be authorised and hold the correct mortgage permissions.
The Loans Engine was one of the first second charge specialist finance brokers to receive formal confirmation from the FCA that its application for the permissions necessary to continue broking second charge mortgages under the MCD had been approved.
The specialist finance broker believes the MCD brings with it an inherent fairness based upon mortgage advisers having to now actively consider all the options available to capital-raising clients, such as second charge mortgages, and not simply being able to default to a remortgage recommendation.
The Loans Engine has repeatedly argued that a number of mortgage clients might find alternative finance options more applicable to their needs. Examples of these types of clients include those who may not wish to lose an existing, highly-competitive first-charge mortgage rate and can instead source a second-charge mortgage to meet their capital-raising needs.
Under MCD, all mortgage advisers have had to decide whether they wish to provide advice on second-charge mortgages themselves, or introduce and refer to a specialist master broker. Those choosing to provide the advice can also utilise master brokers to support their provision of second-charge mortgage quotes to clients and to provide packaging services.
Ryan McGrath, chief executive of The Loans Engine, said: “The MCD has been a long time in the making but it is now a fully fledged part of UK financial services law, and we at The Loans Engine wholeheartedly welcome a directive which is a great leveller particularly between the first and second-charge mortgage markets. For too long, the potential of second-charge mortgages to provide the right solution for capital-raising clients has often been overlooked, but now with these new rules, clients will be made fully aware of the alternatives to a remortgage and will be provided with up-to-date information to make a fair comparison.
“We have already begun working with many mortgage networks and advisory practices that have recognised their need to work with a specialist master broker in this area. A significant amount of work has gone into securing the necessary authorisation, beefing up our technology platform, and ensuring we are ready today to begin dealing with the introductions, quote requests, and packaging needs.
“Today is a ground-breaking and monumental day for the second-charge market as this is finally the level playing field the sector wanted and needed. We are looking forward to forging ahead in this new environment and would urge any adviser or network that is looking for support in this area to get in contact with us as soon as possible.”