FCA Tells Second Charge Mortgage Firms to Raise Standards
24-03-2026
The Financial Conduct Authority (FCA) has told lenders and brokers in the second charge mortgage market that they need to look at how they advise customers, assess affordability and charge fees.
A recent review by the FCA found issues that raise concerns about whether firms are meeting expectations under the Consumer Duty. Issues identified include:
- Overlooking key living expenses when doing affordability assessments.
- Advising customers to consolidate debt when it was not appropriate for them.
- Record keeping that is inadequate.
- Fees, often added to loans, that are unclear.
While second charge mortgages are a small proportion of the total mortgage market, it is often those who have high existing levels of debt and low financial resilience who are looking for this type of finance.
The FCA’s executive director of payments and digital finance, David Geale, said: “The second charge market is relied on by people often already heavily in debt. It’s vital it works well, but we’ve found that standards are not always where they need to be. This needs to change.”
The FCA is continuing to work with the businesses it reviewed to improve their standards. However, they are calling for all lenders and brokers who deal with second charge mortgages to take note of the review’s findings.