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Never say never to secured loans

In a recent news story, when a broker was asked whether a new sourcing system for secured loans would be of value to him, he was adamant there were no circumstances under which he would recommend secured loans.

Everyone is entitled to an opinion, but this broker clearly stated there was no possible scenario when secured loans would be the best choice for his clients.

Sure, the broker could have been quoted out of context and he may not have meant to be so unequivocal.

But this story is worth retelling, partly because his attitude is still prevalent in the industry.

One has to wonder how many brokers hold the belief that secured loans have no place in their work at any price.

Their negative attitude could stem from the fact that the secured loans industry isn’t regulated by the Financial Services Authority and so they don’t consider it to be a viable and compliant option.

However, it’s more likely that their blanket refusal to consider secured loans is an emotional response based on past experience. And let’s be frank, such a dismissal should have no place in brokers’ work, because it doesn’t benefit clients to limit their options.

The financial services industry as a whole has moved on from deciding for itself which products can be offered to customers.

In fact, a beneficial impact of the Treating Customers Fairly initiative and wider compulsory regulation in the market has been to broad-en the choice available to clients.

This in turn has led to more research by brokers. Unfortunately for the more rabid critics of secured loans, this has helped to bring the second charge market firmly into the mainstream as a viable alternative to remortgaging.

I would urge brokers to engage in the debate. Perhaps the most important factor in the discussion is not whether a particular product is the best in an abstract sense, but whether it best meets the needs of specific consumers.

Meeting those needs requires as wide a range of options as possible and secured loans have found a place in the product mix.

So when it comes to secured loans, to do right by their clients brokers should never say never.


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