Responsible Bridging
The only way is ethics
The bridging sector is becoming more professional, or so it claims. Sarah Davidson takes a look at whether bridging is as ethical as it wants you to believe
Bridging used to been known as the Wild West of the mortgage market. In years gone by there were cowboys making irresponsible loans at sky high rates with heavy penalties for failure to repay. But in the muddle of buffalo bills
some did play the game a bit more honestly and in the past few years the larger lenders in the sector have started to fall over themselves to become more “professional”. There are plenty of lenders and
brokers who claim they’re ethical, upfront and honest about the way they operate but it doesn’t take much to peel back the veneer and discover some rather dubious practices. Alan Cleary, managing director of
Precise Mortgages, which launched into the bridging sector earlier this year, says it’s impossible to gauge professional standards. “I don’t think standards are improving because there are no
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standards to measure against,” he says. “It is an unregulated market and therefore you will find poor practice if you look closely enough.” But Fahim Antoniades, director
at Mortgage Centre IFA, argues the growing complexity of the bridging market is an indication of improving standards. “Standards have improved in the
sense that there are more complex products and a more professional sales and business development teams,” he says. “It’s been largely driven by
competition. Bridgers have found a space plugging the void left by the mainstream lenders which has increased their lending volumes. This in turn has been re-invested in developing better products and services.”
Regulation A lack of detailed market statistics makes it hard to be accurate but
BRIDgIng InTRODuCER septemBeR 2011
consensus suggests that anywhere between 85% and 95% of the bridging market is unregulated by the Financial Services Authority because it falls into second charge lending or commercial investment loans. However there is a very real
possibility that any loan made against a residential property will be caught under European proposed legislation in the Directive on Credit Agreements Relating to Residential Property. Though trade bodies, the Treasury
and the FSA are reportedly lobbying to have bridging loans under 12 months exempted from regulation, it’s ultimately anyone’s guess whether this will be achieved. Similarly residential buy-to-
let is likely to be caught by the same proposals and it is already known that second charge lending is to transfer from the Office of Fair Trading to the FSA (or its
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