Secured loan packager V Loans has warned brokers that even though they might have full authorisation for regulated mortgage contracts, they must apply for interim permissions with the FCA in respect of consumer credit activities.

Marie Grundy, operations director, said there are circumstances that could stop a regulated broker from providing the right advice.

She said: “In discussing a consumer’s financial position, particularly in relation to consolidating debt as part of a remortgage application, it might become apparent that it would be better for the client to retain the existing mortgage and look at a second charge loan. However, without interim permissions from the FCA, introducing a client to a second charge lender or a specialist packager like us will not be possible.

“Therefore, unless a mortgage or finance broker has applied for interim permissions by the 31st March 2014, second charge advice is not going to be possible. Given the way in which second charges have developed into mainstream lending products with rates now starting from 5.45% and with the impact of MMR likely to see an increase in demand for second charges, many brokers could lose out and worse, lay themselves open to not being able to offer a truly rounded advice service.”

With AMI (Association of Mortgage Intermediaries) securing an exemption for debt counselling from the FCA as long as this relates to a regulated mortgage contract, the same will not be true for second charge lending until it becomes a regulated mortgage contract in 2016.

AMI’s Chief Executive, Robert Sinclair, added: “It is essential that all who are discussing borrowing and credit options, even just with a view to introducing, hold a consumer credit licence today.  They will have to have applied for and hold an interim permission with the FCA from 1st April 2014. 

“It will become clearer over the coming months who will have to move to the various full authorisation or appointed representative positions.”