Responsible Bridging
was your brother or your mum or dad? “The lenders and the brokers
who are going to do the dodgy stuff are going to do it irrespective of what everyone says. But I think the spotlight is coming into the market a bit more and perhaps some of the dodginess - if it is going on - needs to be weeded out. It’s not in any of our interest to allow that to continue.” Steve McColl, director of broker
View from the top
adrian Bloomfield is director general of the association of short term lenders
aRe pRofessional standaRds impRoving in BRidging?
i’m sure standards in the sector are improving. the conditions preceding the crash meant that there was a degree of latitude in attitude from lenders and the regulator. since 2008 those attitudes have changed sharply. we’ve seen people behave much more prudently and cautiously because they’ve learned their lessons. the fsa and oft both get more involved with our members and there is an undercurrent of encouraging people to behave more responsibly. i think the oft is more interested and is becoming more active as a regulator. i think there is a mood among regulators and at a european level that the light touch regulation didn’t serve anybody well and we should be moving away from principles to rules that people must comply with.
how is that likely to develop?
i think they will look at affordability and the way loans are created. affordability looks quite different in a 25 year residential loan and a six month loan to tart up a property bought at auction with a view to selling it on but i think short-term lenders understand there are going to be tighter rules on how they do business. those companies that are regulated will be required to behave responsibly whether they’re doing regulated or unregulated loans. it’s a very difficult division for regulators to make. there is also a tendency among our members for more of them to seek fsa authorisation.
what standaRds does the astl want to see in the industRy?
if you’re going to lend people money you’ve got to be confident they can afford to repay. if the transaction is to their detriment then you shouldn’t be doing it. i’m sure loans are still made to people desperate for a way to finance their property by lenders which can see there is money to be made. But there’s a consensus that’s not a satisfactory transaction. it doesn’t stop the fear or the greed of some people though. no-one should charge fees for loans they don’t do. i don’t mind upfront fees but if no transaction transpires the fees need to be
14 BRIDgIng InTRODuCER septemBeR 2011
iBridging, says ultimately it’s not difficult to fix things. “Bridging needs to be honest with
itself. Lenders should just quote the real price and pay the fee they want to pay in a proc fee. Expense doesn’t necessarily scare people away. Short-term lending is about the deal being real and the cash being there, price is often secondary to that.” Bridging lenders have some way
to go then before they can truly claim the badge of professional
honour but the fact they want that badge badly is a start. The possibility of regulation
coming in from Europe and potentially the FSA as a result will clearly play its part. But brokers too must step up to
the plate and deal honestly. It is possible to play in this market and keep your nose clean. Lenders and brokers alike must ask themselves why, if this is so, they’d choose to get dirty. n
refunded. everybody has their own policy. lenders may not want to invest the time in exploring doing the deal without commitment from the borrower paying the valuation fee for example which i don’t really have a problem with. what i do have a problem with is lenders advertising loans, taking a fee and not delivering a loan. that is just unacceptable practice full stop. the astl’s view is that this should not be permitted. the lender must be able to demonstrate they intend to make the loan when they charge the fee.
what is ResponsiBle BRidging?
i think transparency is fair. if lenders share their terms transparently with borrowers they are not twisting their arms up their backs to take the loan. it’s a commercial decision which loan the borrower takes. transparency is the name of the game. as long as you tell people precisely what they’re in for and there’s no deviation and nothing hidden, that’s fair. i’m all in favour of having rules that protect the consumer but am less enamoured of the idea that commercial or buy-to-let investors need the same level of protection. with overrides, as long as they’re disclosed and done with transparency and the borrower is able to take that into account and make a decision i don’t have a problem with them.
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