The UK's financial watchdog has warned it will take enforcement action against firms found mis-selling 'second charge' mortgages. The Financial Conduct Authority identified both good practices and 'issues that raise concerns' in its review of the sector. This follows growing scrutiny of how these loans are marketed to homeowners seeking additional borrowing against their property.

Second charge mortgages allow homeowners to borrow money using their home as security while keeping their existing mortgage. The FCA's findings suggest some firms may not be adequately assessing customers' ability to repay or explaining the risks involved. These products can carry higher interest rates than first mortgages and put borrowers' homes at risk if payments are missed.

The watchdog's warning signals potential regulatory action could be imminent for non-compliant firms. With UK households facing economic pressures, the FCA appears determined to prevent vulnerable borrowers from being pushed into unsuitable high-risk lending products. This intervention comes as part of broader efforts to clean up the UK mortgage market and protect consumers from predatory lending practices.