The last Word Regulators run the ris regulation coming out of europe looks like it may catch some curre
Ian Balfour, CEO,
Solent Mortgage Services
on the face of it, the latest proposals from brussels do not
make comfortable reading because while some of the points echo the Financial Services Authority’s Mortgage Market review, there are serious unintended consequences for the short-term lending market which need to be addressed. With a high proportion of bridging and short-term business done in the non-regulated sector, the major problem surrounds the treatment of buy-to-let under european commission proposals. in its current form, all residential loans to consumers would be regulated. the difficulty comes when trying to assess what is a consumer transaction and what represents a business transaction. For lenders, how would they classify an applicant who was buying one property over someone who had a portfolio of a dozen or more? is the purchaser running a business because he has more than one property? the criteria for assessing non-regulated from regulated could become a minefield, particularly when it comes down to the type of documentation necessary. no doubt, as some of our fellow
europeans are adept at doing, we can apply for exemptions to those parts of the future directive,
34 bridging introducer july 2011
which directly affect our particular national interests. At the moment, there is a clear and present danger that short-term lending could be severely damaged, if this proposal is unopposed.
Bob Hunt, chief executive, Paradigm Mortgage Services
if we have learnt anything since the introduction of mortgage
regulation, it is to expect more regulation. the big question however is whether this type of regulation adds anything tangible to the end consumer? in my opinion, like that of many of our politicians and trade bodies, it does not. We have struggled to get where
we are today and it seems perverse that in a still fragile market we could well heap on a load more regulation which will only stifle it further. We are already anticipating what the FSA will enshrine with the MMr and, it at last seems clear, that it will not attempt to regulate further until it sees the cut of this european directive’s jib. i cannot fathom why we need further regulation of bridging loans and buy-to-let – two markets which have performed increasingly strongly in recent months. We all know that regulation costs and if the directive is introduced –
and i say if as there are some major bodies and figures fighting against it – it is unlikely to add much in the way of protection and a lot in the way of cost, which will ultimately be paid for by the consumer.
Gary Bailey, director,
Blemain Group
there will be significant cost and effort on behalf of lenders and brokers to
implement the final proposals. this will mean big changes to current processes, advertising and marketing, suitability, creditworthiness and disclosure, particularly in the property investment and developer markets. bridging on investment and commercial properties in particular has experienced rapid growth in recent years; a significant influx of new entrants are seeking to fill the gap left by high street lenders. regulation in this sector will certainly stifle its growth and could well impede the consumer that it aims to protect. Private funders who might have moved into the market are less likely to want to absorb the increased cost of compliance - restricting competition when it is needed most.
Although regulation is aimed at
providing greater protection for the customer, there are still a number of issues that need to be considered.
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