Round-table
lots of research, there are massive inconsistencies in how lenders operate, which is fine, but in another respect it’s not good for customers.
Like what? Can you give some examples?
AC: The inconsistent nature of how lenders calculate interest in this space - virtually every quotation put out in the bridging market is inconsistent and incorrect. LG: I take issue with that I think that’s wholly incorrect. AC: No it’s fact. LG: No it’s not. Every individual lender is entitled to structure their products the way they want to. Providing their loan offerings are totally transparent in terms of interest, fees and cost then that’s fine. It’s a transparency issue. But it’s wholly incorrect to make the statement that you make. AC: It’s not transparent. I’ve got empirical data that shows the quotations that are being produced.
Lenders are quoting the same rates but coming up with completely different amounts repayable to customers, how does that work? I mean this is mathematics surely. And it’s not transparent to have one case where a customer is being charged £28,400 more interest with another lender compared to our quote and we’re both quoting the same rate. That’s wrong. It’s not transparent, clearly it’s not good for the customer. LG: I think trust management is the word you’re looking for. Some lenders are still guilty of not fully identifying their full costs of their lending. That’s something that the ASTL should be looking for as a standard for members that what lenders are offering is transparent. AB: I will place it before our executive committee and then we decide on the issue as a committee. It may well be that this is a serious issue or that we need to come up with a recommendation for it. The trade body is a servant of its members so here is a perfect example. If the members ask the executives to deal with a matter and analyse it, then of course we will. If it is a conflict of interest with the members then we won’t. I have no mandate to step in to a lender’s own issues. Rob Jupp: Alan’s comment isn’t just another throwaway statement. What he’s saying is proven; this is of fundamental importance to the future of short-term financing. Let’s not overstep this issue. It’s a massive issue and if they’re proven right, there’s going to be a lot of soul searching for all of us but particularly the lenders.
Wayne Smethurst: It’s a transparency issue and you’re also right that lenders are well within their right to have two different ways to calculate retained or rolled up interest. My biggest concern over the past six months on this issue is there are no systems or methodology for a like-for-like comparison for the adviser market such as there is in the regulated market such as the sourcing systems of Mortgage Brain and Trigold. I’m aware there are a couple of companies working on a sourcing system on bridging loans. Hopefully those companies will do what we’ve done and highlight the total to pay over the period as a major point of sale issue.
The AOBP is supposed to represent the brokers and the distributors. Do brokers in the room feel that the AOBP is doing that?
RJ: Yeah I think they’re doing an okay job. I’d grade them a B for attainment and A for effort but it’s an embryonic organisation. It’s better to have these guys around than have the option of nothing. I think the fact that a lot of decent people are on your board is encouraging. As Brightstar we joined as members as we saw value there. What we’ve got to be careful of is that there’s not too much political squabbling going on. LG: What does the AOBP give you that the NACFB doesn’t? RJ: Well we’re members of the NACFB as well. I see value in both organisations for the fairly modest financial amount. The AOBP looks at just bridging, the NACFB looks at
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