News & Views

Why are we all so hung up on regulation?

Regulation, regulation, regulation. We hear about it time and again in the bridging sector. To be honest, it’s getting a bit boring. Why? Because the point is moot in my opinion. Bridging itself is no more in need of regulation than buy-to-let. The vast majority of bridging – or short-term finance more accurately - is a commercial decision, albeit in the residential property market.

These are experienced landlords and property developers looking for reliable and fast finance to fund commercial projects. Regulation is only helpful when there is a consumer to protect – and 95% of bridging is business.

So why are we all so hung up on regulation?

Perhaps the most obvious reason is that the regulator – formerly the Financial Services Authority but now the Financial Conduct Authority – waded into the debate on the bridging market when it published its second Mortgage Market Review consultation paper in late 2011.

It raised concerns anecdotally, saying it had heard of consumers being urged to take short-term bridging in situations they should have been taking a mainstream residential (and therefore regulated) mortgage. Because of the credit crunch and the banking crisis borrowers couldn’t find a deal as lenders, as we know all too well, have been far tighter on their criteria than pre-2008.

But while I have full respect for the FCA taking a stand against this type of customer abuse I think it is fair to say that it is a tiny minority of the bridging market that succumbs to this type of lending – if any at all.

That’s not to say the bridging market and all lenders are whiter than white. There has been much evidence published in various trade magazines showing that some lenders are tying their borrowers up in opaque paperwork, others are charging exorbitant rates of interest, penal rates of interest are being applied, backdated to the start of a loan if it fails to repay on time and there are those still charging sky high fees and then pulling out of doing the loan last minute.

Fincorp raises its game

Bridging lender Fincorp has helped to raise in excess of £12,000 at a charity ball held in June for the Cystic Fibrosis Trust.

In total, the lender has raised a whopping £20,000 through Just Giving, sponsorship of the Cystic Fibrosis annual charity ball and by donating each time it has completed a deal this year.

Directors Matthew Anderson and Nigel Alexander both attended the ball and helped contribute to the £12,208.96 raised on the evening.

But Matthew really got into the spirit of things when the charity auction began, by bidding against his own father for a football signed by the entire Chelsea squad.  Matthew lost out!

“I was just pleased to be able to help an outstanding charity,” said Anderson. “I didn’t mind being beaten by my old man for the football – my son would have got the football whichever of us had won!”

Fincorp committed to raising money for the charity at the start of 2013 as part of its 25th anniversary year.

Matthew added: “This is a charity close to our hearts and one we are proud to be able to support. Many thanks to all those who attended the ball and to brokers who have submitted business to us this year – much of it is going to this great cause.”

For background on Fincorp’s sponsorship of CFT, visit www.fincorp.co.uk/charity