Feature title Blenders
Capital - originally a joint venture between brokers Mortgage Centre IFA and investors the Candy brothers. After less than a year of being led by MCIFA managing director Paul Munford, Omni appointed former GE Money boss Colin Sanders to head up the bridging lender while Munford took a back seat. It was as if the blender crossed its own Rubicon and had to evolve into a lender only status. While Omni doesn’t comment on this balance directly Bob Sturges, head of communications at the lender, says with his proven track record in leading and growing new-start entrepreneurial lending businesses, Sanders was identified as the right person to take Omni Capital forward. “Since being appointed CEO
in June 2011 he has redefined Omni’s lending proposition and distribution strategy, moving the company to the front rank of bridging lenders,” Sturges says.
PRIVATE FUNDING Aside from brokers who lend their own cash there are also the brokers who act as fixers.
OPINION: SMOKE AND MIRRORS
“Private investors lend money directly to clients or link up with them via brokers. The relationships are personal and less onus is put on conventional underwriting. Anecdot- ally there are tens, perhaps hundreds of millions of pounds lent like this”
Whenever people in the industry talk about how many bridging lenders there are in the market the number ranges from 50 to 100. The reason it’s such a broad ball park figure is mostly down to the large number of so-called private investors who lend money directly to clients or link up with them via brokers. The relationships are personal and less onus is put on conventional underwriting. Anecdotally there are tens, perhaps hundreds of millions of pounds lent like this in the bridging market – all under the radar of the trade bodies such as the Association of Short-Term Lenders. Brokers such as Steve McColl, investment partner at
Christian Faes, director, Montello Finance
We are a little concerned about brokers posing as lenders. The bridging finance market in the past couple of years has become hugely overcrowded. There seems to be quite some confusion about who is doing what, what headline interest rates are real, how interest is calculated and now who actually
10 BRIDGING INTRODUCER MAY 2012
has money to lend. If a blender is clear upfront that they are a broker that has some money for deals, then this may be okay - however, we know of a number of operators that are pretending to have money to lend but simply do not. They end up wasting people’s time and not performing. This does nothing to help people’s understanding, nor their perception, of bridging finance. Having said this, there has been an increased level of professionalism come into bridging finance in the last couple of years and this is obviously a good thing. However operators need to be transparent about what they are and what they are really offering.
Soho Corporate, say it’s a lucrative and growing part of the market. “There’s a load of people out there with bucket loads of cash who want to lend,” says McColl. “They can get a great return on that investment as well because they’re just themselves they can often get the deal done in days and can charge a bit more for that.” Gavin Diamond, finance director
at Cheval, says this type of set up is potentially open to abuse by blenders though. “Naturally the potential for a significant conflict of interest exists,” he says. “I believe that in many instances a borrower believes that he is receiving advice from his adviser or broker, even when this isn’t actually the case. Even if the borrower knows that he’s not getting advice, he would naturally expect the broker to be acting in his best interest by obtaining him the best deal possible. In those instances where the broker is also acting as a lender, this must obviously be called into question.” And Lucy Hodge, director of
packager Vantage Finance, says conflicts can arise where a broker lending money themselves does not explore the possibility of cheaper funds for their client. “If the client comes to the broker as just that, a broker priority should be to find the most suitable loan, transparency is key in this situation,” she argues. “Of course pricing is not always the main priority and their ability to lend
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