It is still too easy to disregard secured loans when assessing the optimum way for clients to access funds for capital raising.
The reasons for advising a client to accept a secured loan are very clear and easily assimilated when they are introduced as part of a broader based discussion on capital raising.
Regulatory endorsement alone was never going to persuade advisers to adopt secured loans right off the bat. One of the first things we had to reinforce was that secured loans are not and never will be a straight substitute for remortgaging. I think many brokers felt that they were being railroaded, but once they understood that was not the case, it became easier to demonstrate when and where a secured loan was worth considering.
However, I think there is still resistance to the concept that remortgaging might be the wrong advice. Most of that is based on three main factors. A past perception of secured loans, a view of costs that does not actually bear proper scrutiny and an understandable reluctance to try a sector with which they are unfamiliar.
Therefore, that does mean that there are customers going into a remortgage who would have been better served by a secured loan. Those clients could be at a disadvantage on many levels including an extended length of term they did not want for the extra borrowing, a compulsory change to C&I repayment and seeing their monthly costs increase or the loss of a good long term rate on their existing mortgage, among others.
Changing attitudes to secured loans were never likely to happen overnight, but I believe we are making headway, just not as quick as I think the situation demands.
Tim Wheeldon is chief operating officer of Fluent Advisers