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

Bridging industry must unite

Bridging lender Fincorp is urging the short-term finance industry to unite and move towards an era of professionalism and co-operation. The lender says strides have been taken in the past 12 months to bring the industry together to work towards improving professional standards and behaviour in the sector. Spearheading this move has been the Association of Short Term Lenders (ASTL) which has been headed up by chief executive Benson Hersch since July last year.

But Fincorp believes there is still a lack of will to recognise the excellent job done by Benson and the trade body, with some notable short-term lenders still reluctant to join and work as a united front to better the industry.

Nigel Alexander, director at Fincorp, said: “Fincorp has been in bridging for 25 years and it’s gone through many twists and turns as a sector in that time.

“But recent years have seen competition between lenders become much fiercer and it’s brought out some less attractive aspects of the sector. As a result I think it’s fair to say bridging has been criticised for failing to behave as professionally as it should. But as an industry I think the ASTL and Benson in particular should be congratulated for the steps he’s taken to get everybody on the same page. There are still some kinks that need to be worked through so that lenders are giving consistently good standards of service and offerings but it’s much more likely to happen if we all talk to each other and allow the ASTL to do its job in helping us achieve that.”

Fincorp goes on to suggest that the sector is running the risk of not using the clout it could have collectively to encourage intermediaries and the wider property finance market to use bridging more.

“Part of the beauty of bridging is that it’s a diverse sector with a lot of strong and charismatic personalities,” said Alexander. “But there’s a danger, I believe, that we are allowing too many splintered voices to influence how people outside the short-term market view us and that weakens us. We all want the same thing – a healthy, growing sector with lots of strong and professional players in it so that the customer is served well. We are more likely to achieve that if we show the world a more united front.”

Benson Hersch, chief executive of the ASTL, said: “There are many pre-conceptions in the wider community about the role of bridging; and the way that bridging firms conduct their business – not all these pre-conceptions are positive ones.  It makes sense that we all work in a more integrated way with the wider market; and abide by the ethical principles set out in the ASTL’s Value Charter and Code of Conduct.   This gives confidence to introducers that, when they deal with an ASTL member, cases will be dealt with in a correct and ethical way.   The ASTL will present a conference in October to discuss Bridging present and future and explore how we can all work together better for the good of the industry and its customers.”