Referring second charge cases: what your permissions allow

01

Second charges are regulated mortgages

The Mortgage Credit Directive brought second charge lending into the FCA's mortgage regime from 21 March 2016. Before then most second charges sat under consumer credit rules. Since then, advising on, arranging and lending on a second charge secured on a home follows the mortgage rules in MCOB, the same as a first mortgage.¹

Some loans fall outside, such as certain business-purpose and bridging loans, but a typical homeowner second charge for debt consolidation or home improvements is a regulated mortgage contract.²

02

The three routes, and who can take them

Which route is open to you depends on your FCA permissions, not your job title. Check your firm's entry on the FCA Register, or your principal's if you are an appointed representative.

03

Introducing without mortgage permissions

Article 33A of the Regulated Activities Order lets a person introduce a borrower to an authorised firm without needing permission for arranging. Two conditions apply. The introducer must not receive any money from the client other than money payable to them on their own account, and before making the introduction they must tell the client about any group connection with the firm, any fee or commission they will receive for the introduction, and any other reward for introducing clients.³

In practice that means a short disclosure, given before the referral, of what you are paid and by whom. Keep a copy on your file.

04

Appointed representatives

An appointed representative works under its principal's permissions and policies. Some networks permit second charge advice, some require referral to a panel firm, and some allow referral to any authorised specialist. If you're unsure, ask your principal before you refer.

05

Introducer appointed representatives (IARs)

An introducer appointed representative is a narrower kind of appointed representative. The FCA limits its scope of appointment to effecting introductions and distributing non-real time financial promotions, such as a leaflet or web page the principal has approved.⁴⁵

An IAR can pass a client to its principal, or wherever its appointment allows, but cannot advise on or arrange a second charge. The firm the client is introduced to gives the advice. An IAR still needs to follow its principal's rules on who it refers to and how it discloses any payment.⁵

06

What stays with you when you refer

When another authorised firm advises, that advice is its responsibility under its own authorisation. Your part is the introduction: passing on accurate information, getting the client's agreement to be contacted, and disclosing your commission.⁶

The FCA's March 2026 review found cases where information was lost between intermediaries and lenders, and flagged weak record keeping. Accurate debt balances, rates and early repayment charges, plus a short note of why you referred, protect the client and you.⁷

• The client's agreement to the referral and to being contacted
• Your commission disclosure, given before the introduction
• Accurate figures for every debt, including early repayment charges
• What the client asked for, in their words
• A one-line note of why you referred

07

How referring to Charles Frank works

Charles Frank Finance is FCA authorised to advise on and arrange second charge mortgages. Directly authorised firms can keep the advice and have us package the case, or refer it for full advice. We only advise on what you refer, and we never cross-sell to your client. Every case runs through our introducer portal, which records consent, every debt and a full audit trail, so the record exists from the moment you submit. Before submission, each debt consolidation file is checked for whether consolidating helps the client, including the break-even term.