meta_id 2960618

On March 12, 2026, the Financial Conduct Authority (FCA) published findings from a review of the second charge mortgage market, identifying significant weaknesses in how lenders and brokers advise customers, assess affordability, and charge fees. Second charge mortgages enable homeowners to borrow additional funds against their home equity without changing their existing mortgage. The market represents less than 4 percent of regulated mortgage sales. The FCA's review found that these products are frequently used by customers with high existing debt levels and low financial resilience, often for debt consolidation purposes. Key issues identified include affordability assessments that overlook essential living expenses, advice steering customers toward debt consolidation without clear appropriateness justification, inadequate record-keeping practices, and unclear fees frequently added to loans, which impede customer comparisons. The FCA noted that some firms' practices may not meet expectations under the Consumer Duty and could expose borrowers to increased financial harm. David Geale, executive director of payments and digital finance at the FCA, stated: "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 calling on all second charge firms to carefully consider the review findings and take appropriate corrective action. Mortgage brokers across the wider market are encouraged to review findings on record-keeping and quality assurance. Over the next year, the FCA will continue engaging with firms to drive improvements, monitor second charge lenders and take regulatory action where necessary, and consider potential mortgage policy changes to support positive outcomes for consumers consolidating debt. REFERENCES: https://www.fca.org.uk/news/press-releases/second-charge-mortgage-firms-told-raise-standards-consumers