Customers deserve clarity and fairness when taking out secured loans
A NATIONAL broker is calling for companies within the secured loan industry to stop PROFITEERING from customers and charge ‘fair fees’.
Thousands of borrowers seeking second charge products, for reasons ranging from debt consolidation to home improvement, are flocking to the market in increasing numbers* but many are hit with excessive broker fees on top of lender charges, in some cases adding more than 12 per cent to the total cost.
Paul McGerrigan, CEO of Loan.co.uk, said: “This is unjustifiable, unfair to customers and has to change. As an industry, we are obliged to give best advice and treat customers fairly. Using any kind of broker or price comparison website is perceived by consumers to be the best way to search the market and obtain the best deal, however this trust is sometimes betrayed by those protagonists, who play a role in charging unnecessarily high fees, which are then usually added to the loan amount, costing the customer thousands of pounds more than necessary.
“Of course, the industry has overheads such as legal fees, valuations, consents, marketing, personnel, technology and business costs, so it is completely reasonable to charge a fee, but those who add anything over six per cent should look again at their business model and question their reasoning. Do they need to charge that much or is it because their customers aren’t questioning it and they can therefore get away with it? – either way are they treating their customers fairly?”
Loan.co.uk, an online mortgage and loan brokerage, has launched its ‘Fair Fees’ campaign in a bid to reduce borrowing costs for customers and increase competition so that the public can get better deals without strings attached and more people can use what is an increasingly useful and competitively priced product.
McGerrigan explained that Loan.co.uk, which uses a highly advanced AI (Artificial Intelligence) platform to deliver the best deals to customers in a more efficient manner, was on a mission to drive costs down and increase clarity during the application process.
He added: “The second charge market has doubled in size this year, leaping from £56m in January to £102m by the end of September*, making this issue ever-more urgent.
“Secured loans can be the best way for customers to obtain larger sums such as those needed to carry out major home renovation. On average, the size of these loans in the UK during September was around £42,000*, so when you think some brokers are charging fees up to 12.5 per cent, that amounts to an eye-watering £5,250 average fee which, in my opinion is difficult to justify.
“To make matters worse, some broker websites are unclear what level of fee they charge until the prospective borrower starts the application process, which needs to be addressed.”
– ENDS –
NOTES TO EDITORS
* – FLA figures show 2nd Mortgage Market volumes of £56m in January 2021. September volumes £102m. Average loan size across the market in September 2021= £41,837.57.
In a statement on Friday, November 5, Fiona Hoyle, Director of Consumer & Mortgage Finance and Inclusion at the Finance & Leasing Association (FLA), said the market was expected to continue growth for the rest of the year:
“The second charge mortgage market reported its sixth consecutive month of growth in September, with new business returning to levels seen pre-pandemic. We expect new business volumes to continue to grow during the remainder of 2021 as demand remains solid.”
Loan.co.uk charges a broker fee of 5.9 per cent which includes property valuation costs.
ABOUT LOAN.CO.UK
Loan.co.uk is a national, online credit broking business.
Established in 2014, the company has been working with the most advanced technology to build intelligent systems which will change the lending market, using a highly advance artificial intelligence platform combined with experienced human brokers to streamline the application process and improve the customer experience considerably. The business stands for transparency, fairness and excellent customer service.
Loan.co.uk Limited is authorised and regulated by the Financial Conduct Authority.
For more information, contact the Loan.co.uk Press Office:
Email: pressoffice@loan.co.uk Phone: 01202 125070