I don't know what the rules are on the new scheme, or even if current LSAP rules have changed recently, but I had an experience with LSAP several years ago which may be of interest to readers of this thread.
I took out £5,000 of LSAP, as it appeared to be effectively an interest free loan. However, it was viewed, at least by my mortgage provider, as a "second charge" against the property in question - not as a personal loan to myself. When I attempted to increase the size of my mortgage (school fees - boarding school allowance only covered about 50% of the fees, but that's a whole different thread) having a second charge on the property caused all sorts of problems, to the extent it was simpler for me to pay it all off there and then.
I could see this situation potentially effecting others in future. I only had about £4,000 left to pay off, which I could manage with a bit of juggling, if someone still had £25,000 outstanding it might be more of an issue!!