Brokers also need to take a stand on standards

In recent weeks, there has been comment in the trade press from both Masthaven and the Association of Short Term Lenders (ASTL) regarding the potential regulation of short-term commercial lending.

The general consensus is that lenders must take a united approach now to ensure the industry is in a stronger position in the future. I agree that a collective effort is required, but I also believe that brokers have a role to play as well. For example, default rates have been another key area of discussion recently, and it’s true that there is some disparity between lenders in their approach to default interest charging. Many lenders are willing to work with the borrower to avoid default rates, while others take a less conciliatory approach.

However, with a proactive broker, there is no reason why a client should get to a position where they are charged default rates. It always surprises me that some brokers do not stay close to clients who have entered a bridging facility and brokers should be contacting their clients throughout the term of a loan. If it looks like the client is unlikely to secure an exit by sale of the asset within the timeframe, speak to them about their refinancing options.

Brokers are in a position of significant influence. They can influence their client’s options and the standards to which lenders are held. If there are lenders that are falling behind the pack on standards when it comes to transparency and underwriting, they will soon raise their game if they fail to win business. So, at this time, when lenders are calling for a collective approach, brokers also need to take a stand on standards.

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