The Government has set out plans to regulate the advice and the sales of secured loans – a move which has been welcomed by many.

Right now there is no regulation of secured loans, unlike for mortgages, pensions and investments. The advisers do not have to be watched by the Financial Services Authority and neither do the lenders. This means if something goes wrong, and someone thinks they have been wrongly sold a secured loan, maybe nothing can be done by the authorities.

There is some people watching over secured loans: the Office of Fair Trading makes sure the sector broadly does what it should, but there are still holes so the Government wants to make sure things are watertight by ensuring the FSA look at secured loans as they would mortgages.

Robert Sinclair, director of the Association of Finance Brokers, says: “We fully support this announcement as we have long been calling for an alternative regulatory regime under FSA. This would benefit intermediaries, lenders and consumers.”

You may have taken out a secured loan in the past, or you may be planning to take one out in the near future and knew nothing about the regulation of the industry – but it’s something you should always be aware of. Regulation means protection and it means quality – without it you are always at risk.

So even though the secured loan market isn’t regulated, make sure you deal with an adviser who is. Look for the FSA REGISTERED note on their website or their literature. Even ask them if they are authorised as a legal financial adviser – because that means honesty, quality and someone you can rely on.

SOURCE: AFB, 25/03/09

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