For some people, deadlines are manna from heaven. Give the right person the right deadline and watch them put all their efforts into completing their tasks by the time and date in question. However, for others, deadlines can be soul-destroying – for those who are prone to procrastination the deadline acts as a debilitating force. Why complete today what you can put off until tomorrow? Indeed, with a deadline thrown into the mix, for these individuals the opportunity to leave it all until the last minute seems almost too good to be true.
And so we move on to financial services deadlines – and let’s be honest, we’ve seen enough of those over the last decade to be fully aware of how we should (and shouldn’t) work towards them. As I write, we are just a weekend away from the next big day – the introduction of the Mortgage Credit Directive and even at this very last stage I know there will be advisers and firms out there who are undecided about how they progress, particularly when it comes to the choices they must make regarding second-charge mortgage advice.
To that end, for those who have yet to make up your mind around whether you will offer second charge advice at all, whether you’ll use the services of a master broker, who you will use, and all the other questions thrown up by the MCD, here are seven points to consider that should hopefully help you make that decision:
1. Firstly, when thinking about whether you want to be involved in the second charge mortgage market, think about what may happen if you decide not to be involved. For a start no second charge mortgage offering may mean your clients go off to price comparison sites to access the finance they need. – is this really good for your relationship with your client?
2. Secondly, take a moment to think about the second-charge mortgage products that are now available and how they might be relevant for your client base. For instance, seconds are now available with prime pay rates from 4.55% and they can provide a great substitute where the existing lender won’t provide a further advance or the client has a great lifetime tracker rate. Do you have clients for whom these products might be appropriate?
3. If you want to be (or remain) independent then you effectively have no choice. You’ll need to provide the second charge mortgage advice yourself, rather than referring and introducing clients on to a master broker. However, a master broker can still help you in terms of quote provision and packaging services. If however being independent is not a major priority, you can refer the client on to that same master broker who will provide the second charge mortgage advice and recommendation.
4. Don’t forget, you’ll need to partner with a second charge broker who has the scale and resource to cope with the inevitable increase in demand we will see post-MCD. The reason will be that every capital-raising remortgage interview with a client will now need to at least mention seconds.
5. You’ll need a broker who is whole of market and uses the full market on every enquiry and doesn’t have favourite lenders – some loan brokers may be tempted to take the line of least resistance and use the same two or three lenders each time. You wouldn’t do this when you deliver first charge mortgage advice, so ask your master broker to see their ‘lender spread’ KPIs. This should show that no one lender is taking more than one in eight of the master broker’s written business.
6. It’s very important you use a master broker that has the technology to access real-time credit reports via a soft footprint search, and uses this data to source the whole market. Accurate quotes are vital if you or the client are going to be able to compare like with like.
7. Make sure your master broker has a slick process, and operational efficiencies to ensure the case progresses as quickly as possible, and that you are paid your commissions on time. Ask to see your master broker’s electronic case management system.
So there we are – hopefully (at the very least) this gives you food for thought and helps you to move towards a decision sooner rather than later. The good news is that there are businesses like ours which can support you whatever you decide to do. The important point however is to actually make that informed decision – after that, the process should become clear and, dare I say it, so should your choice of master broker.
‘MCD Day’ perhaps won’t be as important to you as your wedding day, but you still need to make sure you get to that regulatory ‘church’ on time.
