Penn Financial Comment on FCA Review of the Second Charge Mortgage Market

The latest update, 12.03.2026, from the Financial Conduct Authority, highlighting concerns in the second charge mortgage market, serves as an important reminder of the responsibility lenders and brokers carry when advising clients who may already be under financial pressure.

Second charge mortgages can be a legitimate and useful financial tool in the right circumstances. They allow homeowners to access equity in their property without disturbing an existing mortgage arrangement. However, as the FCA rightly points out, these products are often used by individuals with higher levels of debt and lower financial resilience, meaning the standard of advice, affordability assessment and transparency must be exceptionally robust.

We believe that responsible advice must always begin with a clear understanding of the client’s wider financial position. This means taking the time to carefully assess affordability, consider alternative options, and ensure clients fully understand both the benefits and the long-term implications of borrowing against their home. We have heavily invested in this part of the service, and are confident that our processes are robust.

The issues raised in the FCA’s review, including incomplete affordability assessments, unclear fees, and weak record-keeping, reinforce why strong internal processes and a culture of transparency are essential across the industry.

The introduction of the Consumer Duty has further strengthened expectations that firms must act to deliver good outcomes for customers, not simply compliant transactions. For advisers and brokers, this means ensuring recommendations are demonstrably suitable and clearly documented.

While second charge lending represents only a small proportion of the overall mortgage market, the FCA’s findings highlight that there is still work to be done to ensure consistent standards across the sector.

For firms operating in the mortgage and financial advice space, this is a timely opportunity to review internal procedures, strengthen quality assurance, and ensure that client outcomes remain the central focus of every recommendation.

At Penn Financial, we welcome continued regulatory engagement that helps maintain trust, transparency and high standards within the financial services industry.

Shak Inayat

Penn Chambers Solicitors

0207 183 2898

The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.