Second-charge mortgages: what MCOB means for introducers

How second charges came under MCOB

Before 21 March 2016, second-charge mortgages were regulated under the consumer credit regime. When the UK implemented the EU Mortgage Credit Directive, the FCA moved them into the mortgage regime, so they are now covered by MCOB like first-charge lending.^[1][2]

What it means in practice

MCOB sets out requirements for advice, responsible lending and affordability, and for the information customers receive before they commit. For the client, that means a second-charge application looks and feels much like a first-charge one: a fact-find, an affordability assessment and clear product disclosure.^[1]

For introducers, the useful point is the split of roles. The adviser assesses suitability and affordability. What you say before the introduction should be accurate and balanced, and should not pre-judge what the adviser will recommend.

Talking to clients before the introduction

A few plain points cover most conversations:

• A second-charge mortgage is a loan secured on their home, alongside their existing mortgage.
• An adviser will look at their circumstances and may recommend a different option, including not borrowing.
• Any rate they've seen is indicative until the adviser and lender have assessed the application.