What MCOB conduct rules mean for introducers of second-charge mortgages

MCOB, the FCA's Mortgages and Home Finance: Conduct of Business sourcebook, sets the conduct rules for regulated mortgage lending, and has covered second-charge mortgages since 21 March 2016.¹

Before 21 March 2016, second-charge mortgages were regulated under the consumer credit regime. When the UK implemented the EU Mortgage Credit Directive, the FCA moved them into the mortgage regime, so they are now covered by MCOB like first-charge lending.^2,1

MCOB sets requirements for advice, responsible lending and affordability, and for the information customers receive before they commit. For the client, a second-charge application now looks much like a first-charge one: a fact-find, an affordability assessment and product disclosure.¹

The useful point for introducers is the split of roles. The adviser assesses suitability and the lender assesses affordability. What you say before the introduction should be accurate and balanced, and shouldn't pre-judge what the adviser will recommend.

In practice that means passing the adviser what the client has told you, unedited: what they want the money for, what they owe and what they can afford each month. Gaps found later slow the case and can change the answer.

Complaints show where this goes wrong. In April to June 2026 the Financial Ombudsman Service upheld 35% of the second-charge mortgage complaints it resolved, against 26% for first-charge mortgages.⁴

Lenders are responsible for affordability assessments under MCOB 11.6, and the FCA reminded them in March 2026 that they can't outsource or delegate that responsibility when an intermediary is involved.³

The same review found that some intermediaries didn't pass all relevant customer information to lenders, so lenders sometimes underestimated what customers spent. Complete information at the start protects the client and the introducer.³

Plain wording that covers most conversations:

• "A second-charge mortgage is a loan secured on your home, alongside your existing mortgage."
• "An adviser will look at your circumstances and may recommend something else, including not borrowing."
• "Any rate you've seen is only a guide until the adviser and lender have assessed your application."