A few years ago, an enterprising publisher launched a ‘good news’ paper only for it to fold quickly as there was no interest. It says a lot about the human psyche that we are more interested in hearing bad news. We see it on motorways when there has been an accident on the opposite carriageway but there is inevitably a long queue on our side of the road, as people inevitably slow down and stare. Glad it isn’t them but wanting unconsciously to see the extent of the damage both to vehicle and occupants.
If bad news sells newspapers, it is also true in our own part of the financial services market that inevitably a headline describing something negative garners more attention than a good news story.
The second charge market has seen this phenomenon recently with pundits lining up to question why secured loans’ business volumes have declined a year on from MCD. On the basis of just a quarter’s figures from the FLA, the negativity engine was well and truly primed.
In fairness, it could have been a direct reaction to some of our competitors being too confident that the MCD was going to lead to a land of milk and honey, where secured loan applications would be as plentiful as articles on Brexit. However, the reality of the year beyond MCD played out much as we had envisaged at Fluent.
While the changes did provide advisers with a clear mandate to include secured loans in their deliberations, it was always going to take more than tweaking fee structures and telling advisers they must look at secured loans to convince them to make so big a change, when they had been quite happy with the remortgage/further advance option.
We took the view that we had to demonstrate why and how second charge loans could be a better answer than a remortgage and that it was going to take time. By making the business case logically, we have been successful in developing new business from multiple new sources. Advisers are much too canny to be browbeaten into accepting what was to many a new concept, without asking questions and getting straight answers.
Business volumes for secured loans are now picking up across the UK and perhaps the doom mongers will find something else to moan about. But it is a lesson learned for those who were enthusiastically telling the media about how successful second charge lending was going to be straight after MCD. Don’t make predictions you can’t support or someone will be just around the corner to say – “I told you so!” and the sector suffers because of the subsequent negative publicity.
Jeff Davidson is head of intermediaries at Fluent for Advisers
