After the FCA was appointed as industry regulator in April the loans industry went under some rather radical changes. The tightening of consumer credit, especially in terms of its affordability criteria, has meant that many firms are having to consider alternative lending methods not just for their own sake but to ensure they comply with the new consumer-friendly guidelines.
However, while I’m sure some are still finding their feet with these new changes, most have jumped on board and it seems as though the secured loan may quickly become lender’s “new best friend”. In a recent Broker Stance Survey carried out here at The Loans Engine, 63% of respondents said they were placing more homeowner loans compared to 12 months ago. Why? Well, 80% of brokers confirmed that presenting clients with all the options was the main driving force.
Whilst, the tougher mortgage criteria set out in the Mortgage Market Review has seen a drop in successful remortgage applications, it also called for a wider range of finance sources to be offered. Ultimately, that has helped the secured loan to step into the mainstream and become a real, viable alternative to remortgage and further advances. Still relatively small in terms of the wider personal finance industry, both the growth in consumer interest and broker’s determination to promote secured loans reflects both the huge jump in product innovation and the onus placed on customer satisfaction.
But, as offering all the options means exactly that, The Loans Engine also embraced the idea of change and started offering unsecured loans to qualifying customers looking to raise lower sums of finance. After specialising in secured loans for over 25 years, we found that not only was this a way of offering clients a more varied and wide-reaching service, we also noticed an improvement in business with an increase in client retention and further income opportunities.
In the current economic climate, the personal loan industry shows no signs of slowing down and neither does the demand for more options. The FCA will continue to push protection and better outcomes for consumers and, in turn, this will encourage lenders to give clients all the information they need to make informed choices best suited to their personal circumstances.
Let the ‘whole of market era’ commence.
