Martin's Mailbox: Don't ask Mervyn…

Martin's Mailbox: Don't ask Mervyn…


Should the bridging industry adopt the APR standard prevalent in the mainstream lending market? That’s the question put to me in recent days. It’s also one that divides opinion.

For my part, I’m in the ‘no’ camp. It’s not that I’m against improved transparency, or giving my support to any appropriate measure that helps de-mystify some of the more opaque aspects of bridging. Why would anyone? But I don’t see that a simple read-across of APRs would be of particular benefit to the short-term sector and its customers.


Contemporary bridging provides a diverse range of often financially-savvy customers with a nuanced, specialist form of lending. As it grows and matures, the sector is adopting many of the standards apparent in the mainstream market. But direct cost-of-borrowing comparison in the form of APRs is not, I would argue, a pressing or even relevant issue.

The introduction of APRs some years ago has not been the panacea some hoped for. In fact, it could be argued that consumers have been left even more confused. As for those of us earning a groat in the industry, it’s a rare beast indeed that can succinctly, and convincingly, explain how the thing works.


Were APRs to be adopted, I doubt it would have a significant impact on customers’ borrowing choices. Nor do I think they are a helpfully-representative measure of what bespoke short-term products provide to borrowers looking for funding certainty, speed of service and flexible outcomes.


What is undeniably important is for customers to be provided with clear, unambiguous information regarding all fees and charges associated with their facility; and what this translates to in terms of the total cost of borrowing. From this, it’s relatively easy to make financial comparisons. But as we all know, bridging products often sell themselves on more than price alone.

Taking a wider view of the lending scene, a couple of bombshells landed last week. First, the governor of the Bank of England, Mervyn King, delivered a mea culpa for his part in the credit crisis of 2008. Apparently, he did this with the help of a radio broadcast – the first governor to do so in 70 years, the trendy old thing. Some have suggested it’s a resigning matter, but I couldn’t possibly comment.

Second, we were presented with the startling fact that the banks still aren’t lending to SMEs. (Swipe me sideways, guv, who’d have thought it?) This, despite bloated balance sheets courtesy of cheap taxpayer-funded money hoovered up via direct subsidies and a programme of quantitative easing. It’s bad news for the economy, but particularly for those plucky souls with the guts, drive and glass-half-full optimism to run a small business in modern Britain.


On a lighter finishing note, I’m sure we were all cheered to see the shortlists for the forthcoming B&C Awards, the social highlight of the year. To all of you who helped secure Omni Capital’s prized place in one of the categories, I thank you. To all other contestants, may the best man, woman or business win. See you on 11th June.  

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