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Second charge must reform or FCA could step in: Blackwell

Former FCA mortgage sector manager Lynda Blackwell has criticised the level of some second charge fees and called on the market to reform itself or face the regulator stepping in.

Speaking at a London Money second charge masterclass in London yesterday, Blackwell questioned the level of master broker fees for second charges when compared to first charges.

She said: “I don’t understand the reason why master brokers are still operating in the way that they do, and charging for it.”

Blackwell added: “Second charges are ‘a product at any cost’; they should be ‘a product at a fair cost’.

“I’m really interested to understand the reason for these fees when you look across at the first charge market. Why is it different?”

Blackwell noted that fee levels start with lenders, and added that the second charge market had a chance to reform its fee structure before any chance of the regulator stepping in.

She said: “You have an opportunity to change things yourselves. The regulator would think that’s great. Six lenders have the majority of the market. Why can’t they get together?

“It’s crazy for an industry not to step up to the plate and do something. It’s going to cost you a fortune if the regulator has to do it for you.”

Blackwell also said the FCA competition review of first charge mortgages was likely to be applied to second charges.

She said: “The mortgage market study will be read across to the second charge market. The second charge sector should wake up to that.”

Blackwell stepped down from the FCA last July.

During her time at the regulator Blackwell was the architect of the Mortgage Market Review, and before that was mortgage policy manager.



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