James Bloom

Short-term commercial lending: how can we prepare for regulation?




With short-term finance becoming increasingly mainstream, the question of regulation for the sector — particularly within commercial lending — is becoming a case of when, not if.

A formal commitment

The Association of Short Term Lenders’ (ASTL) existing code of conduct has treated customers with fairness at its heart and is a core requirement. But, of course, the ASTL’s code applies only to its members. Should regulation come in, we should consider making ASTL membership mandatory for all short-term lenders or extend the remit of the organisation’s code, so it applies to the whole of the industry.

Accredited underwriting?

Short-term lending can also be more complex than traditional long-term residential lending, so a level of expertise is often needed. While lenders are responsible for their own training and bringing their people up to speed — and some are very good at doing this — it remains true that there is no formal industry requirement for the training of staff.  

Who would join me in welcoming an industry-wide underwriting qualification? Equipping our people with accredited skills will no doubt improve the quality of underwriting and boost the confidence of borrowers, brokers and the regulator.

Let’s focus on the collective

In all industries, not just financial services, there can be a tendency for firms to adopt a silo approach, focusing too much on themselves and not engaging with the wider community. This bunker approach can stifle innovation, reduce knowledge-sharing and lower standards. If short-term lending is to truly thrive, it will need a combined, collective effort by those working in the industry. Let’s commit to sharing ideas and best practice through regular meet-ups, roundtables and events — especially with new entrants to the market.

I call on lenders and brokers to come together to share ideas as to how we can bring this about.

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