The Last Word
Market Review had some sensible comments to be made in relation to bridging finance. In many respects, the bridging finance section of the consultation paper was more of a guide to good business practice for a lender. I am sure that most established lenders would already comply with most of the suggestions. At Montello we are going through the process of becoming authorised with the FSA, and see this as a necessary step to the business maturing. With regards to the FSA focusing on bridging finance, it could be argued that it isn’t entirely helpful. We know that the NACFB has fought successfully for many years to ensure that commercial mortgages remain outside of the FSA’s regulation. However, the ASTL seems to hold it as a badge of honour that the FSA is now focussing on regulation. The reality is that the FSA was probably always going to focus on bridging finance regardless of what lobbying people claim to have done. The niche market has moved into the mainstream, and necessarily there was always going to be more focus from the regulators.
Adrian Bloomfield, chief executive, the Association of Short Term Lenders
Bridging being mentioned in the Mortgage Market Review is
absolutely a positive for the short- term lending market because of the context in which it was mentioned. Through the MMR the FSA looked to introduce some regulation that would have been most damaging for short-term lending, particularly the proposals regarding the serious reduction of interest-only mortgages. If this regulation were
36 BRIDGING INTRODUCER MARCH 2012
to go through it could have the potential impact of almost wiping out the short-term lending market as almost all short-term lending is carried out on an interest-only basis; it is the short duration of the loans which makes most other repayment methods untenable. The ASTL has managed to influence the regulator to be specifically considerate to our industry, because of the unique role that it plays and the unique way in which short-term loans are formulated. Borrowers in need of bridging finance or short-term loans have different requirements from those in the mainstream mortgage market and it is important that their needs are addressed differently, in the same way that borrowers of commercial finance or buy-to-let loans need to be treated differently. There is still a lot to do and the ASTL will be making its comprehensive response by the deadline at the end of March but the FSA was clear in its discussions with the ASTL that it is not set on eliminating the market as it wants to see consumers offered this choice. We will continue to input into the consultation process by consulting with our members on every single question that affects our industry in order to shape our answers and provide beneficial input to the proposed regulation.
Colin Sanders, chief executive officer, Omni Capital
I consider it to be a positive development. Given its rise
in prominence, bridging was never going to stay out of the regulatory limelight forever. But
it is important that it doesn’t get treated simply as an adjunct to the mainstream mortgage market. Bridging is a discrete sector. It exhibits process and product characteristics not found elsewhere. The underwriting component is nuanced and often presents lenders with heightened, or different, forms of risk. It is also a product channel more commonly used by financially- savvy individuals. It would therefore be inappropriate to lump it in with other forms of secured lending. The FSA appears to have recognised this. By singling out bridging, we have an opportunity to engage with the authorities to shape the regulatory outcome. We all have a part to play in this, but I would expect our trade bodies to take the leading role. I’m pleased to see that this appears to be happening. What isn’t clear is the extent to which bridging will become regulated across all its parts. Mixed messages are being sent out. But tighter control of a sector that has become increasingly important is almost inevitable, particularly in light of the authorities’ determination not to repeat the mistakes of the past. While regulation is not to be feared – and may even be desirable to ensure long-term sustainability – it should not be implemented in an unthinking way that restricts the free-flow of liquidity, the life-blood of the sector. Nor should it become so onerous as to add unnecessary costs – which, inevitably, the customer will bear – while restricting sensible innovation. For all these reasons, we should seize the opportunity to ensure an outcome that maintains bridging’s germane place in a market still short of confidence, funding and ideas.
www.mortgageintroducer.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40