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Second-charge is no less important

Second-charge is no less important

With the publication of the final rules for the consumer credit market, the second-charge sector can proceed with a clearer roadmap.

Regulation by the FCA starts next month so brokers must ensure their interim permissions are in place before 1 April. They would also do well to check they have the right categories on their existing OFT licence. Similarly, they should check that all their documents have the correct disclosures, their policies and procedures are documented and they can demonstrate compliance with all FCA principles of business.

The 11 principles are exactly what most of us will have been doing automatically in running a business. The focus is on the best interests of the client while maintaining a transparent and efficient administration ethic. But it does not hurt to refresh our understanding.

In two years’ time, second-charge contracts will become regulated products as a result of the EU mortgage directive. In the meantime, the intention is to bring the first- and second-charge sectors into balance.

While all intermediaries regulated by the FCA will be expected to offer advice on the widest range of lending options, without the specific permissions, they will be unable to advise on second-charge for consolidation purposes, for example.

Industry bodies have worked with the regulator to provide greater clarity ahead of D-Day but brokers are running out of time to get their affairs in order.

Source: Mortgage Strategy




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