Industry Insider: Do trade bodies deliver?

Industry Insider: Do trade bodies deliver?


In light of recent press coverage and comments about the effectiveness and representation of trade bodies within the bridging sector, B&C wanted to delve deeper into the industry to find out what people are really thinking.

The trade bodies were the subject of discussion last week with some voicing concerns as to how effective and representative they are, with one body in particular the source of a different debate.

Colin Sanders, Chief Executive at Omni Capital, last week called for there to be ‘truly effective and representative trade bodies’ for the sector this year, with some believing that he was suggesting that the Association of Short Term Lenders (astl) is not working.

Speaking on the astl specifically, an industry insider told B&C that: “The astl does much work quietly behind the scenes and has in fact been very effective in representing bridging lenders, for example in making its case to the FSA; and the fruits of that work are shown by various aspects of the MMR. What the astl is not so effective at, is shouting out about its achievements. The main thing is that it gets on with dealing with what its members have identified as priorities and members do not appear to think that it is necessary that the astl has to respond to very media "topic du jour".”

Adrian Bloomfied, Chief Executive of the astl, has already publicly stated that the trade bodies are very effective and highly regarded, which is why there is a section in the FSA's latest MMR paper focusing specifically on the short-term sector.

Adam Tyler, Chief Executive of the NACFB, responded: “The NACFB was instrumental in the formation of one of the Bridging Trade bodies, but constitutionally could not provide the required secretariat and is close to the other one formed later, and we meet with both regularly. The latest MMR consultation paper dedicates just three pages in its data pack to Business Lending, from that we can only conclude that the NACFB has been doing its job properly over the last 20 years. Trade Bodies need to engage with the FSA only when they are required to do so, otherwise you invite regulation.”

Speaking about how effective and representative the lender trade bodies are in the industry, Christian Faes, Managing Director at Montello Finance, said: “It certainly would be good if there was an effective industry organisation that cohesively represented the interests of bridging lenders.”

James Bloom, Chief Executive of Regentsmead, gave his view on the matter: “As a purely development lender we are not a member of the ASTL but we are a patron of the NACFB. I can certainly say how impressed we are with the work the NACFB does and particularly the high level lobbying that they do. I hear good things about the ASTL as well from members.”

Adam Tyler agreed that further discussion was needed to agree the responsibilities of each bridging lender respectively. He added: “A Trade Body should operate, of course for the benefits for its members and for no other reason. We have the added advantage that by benefitting our members, the SME’s of the UK also get help. With over 70 lenders that helps both brokers and customers’ parties grow their business, and all the time at the heart of the NACFB is our Code of Practice and this is the basis on which we work, it gives both protection and assistance without the need to be regulated by the FSA and this should be the focus.

Adrian Bloomfield was also a topic of conversation last week when he revealed that there are at least three major financial institutions poised to start lending in the short-term sector this year and indicated that there were “lucrative opportunities” for entry into the sector as it is perceived to be ‘very profitable and lucrative with moderate risk’.

This has caused concern among figures in the industry with some feeling that general trade bodies, such as astl, should not be ‘talking up the prospects’ for more additions into an already crowded niche and specialised sector. Bloomfield also revealed there is currently a waiting list of 10 lenders ready to join the lender trade body.

Christian Faes, told B&C: “To be honest, anyone who is actively involved in the bridging finance market knows that it is quite crowded. It is a bit self-serving (although not for its members!) for an industry organisation to be talking up the prospects for even more entrants to the market.”

Another anonymous source said that there have been previous comments on how Bloomfield doesn’t defend his members enough, for example in regards to “AMIs comments about dealings with non-regulated lenders…he should have been screaming at this.”

However, our industry insider believes: “One of the main reasons for the influx of new lenders is due to some existing lenders extensively publicising how much business they are doing and also the various claims as to the size of the sector, which are unsupported by independent audited empirical data."

James Bloom said: “I am not surprised to hear comments there are lucrative opportunities as, although this is a crowded market, there is always room for a professional, service driven organisation coming into a sector with fresh products and ideas. Good competition is always welcome and will knock out some of the less scrupulous or weaker competitors. The market does not NEED another lender but I would certainly agree there are lucrative opportunities.

“The short term market is attracting new companies all the time because of the returns on offer in an increasingly uncertain investment world. The 10 per cent plus returns are very attractive coupled with the level of security on offer.”

Adam Tyler disclosed more information on the NACFB workings. He said: “Last year the NACFB saw a 180 per cent increase in short lending introductions by our members, of whom around three quarters are unregulated by the FSA, that £1 billion plus of short-term lending from the NACFB went to a wide choice of short term lender. There are ample funds available in this marketplace to sustain the requirements and when the rest of the market is still very restricted, we need to ensure that the perception of the Bridging market is correct.”

All in all, we must celebrate the work that the trade bodies have done and are doing. Their service to members is very much valued and on the whole has been very successful, but there is room for improvement and the concerns raised indicates how much pressure people are feeling at the moment with the increased scrutiny the sector is going through. The call for more interaction and representation is very much welcomed and highlights how 2012 is set to be a key year for the trade bodies to work effectively together for the good of the industry and its members.

By Jason McGee-Abe

Leave a comment