Martin's Mailbox: Self-regulation in the spotlight

Martin's Mailbox: Self-regulation in the spotlight


Last week saw the publication of the long-awaited Leveson Report into press standards. Commissioned by the Prime Minister and following the hacking of a murdered teenager’s mobile phone – a revelation that sparked nationwide revulsion – Lord Leveson was charged with recommending a possible solution to the worst excesses of the media.

I’m writing this before the full impact of the report is felt; doubtless many hours of broadcasting and yards of column inches will follow as commentators seek to analyse His Lordship’s findings in minute detail. Whatever the final outcome – and politicians have a habit of shelving independent reports to gather dust on Whitehall shelves – the episode raises pertinent questions about the role of self-regulation in public life and the commercial sector.

Published last week on this very website, B&C’s Alexandra Jones wrote a thought-provoking piece on the future shape of regulation in the bridging sector. Largely unregulated by the FSA until now, bridging has since found itself under the spotlight as part of the regulator’s recently completed Mortgage Market Review (MMR).

While elements of the MMR remain to be finalised, any momentum appears to be firmly in the direction of greater regulatory control of our thriving sector. Many within the industry find this difficult to accept and argue, with some rationality, that bridging is quite different from its mortgage market counterparts and should not be subject to the same set of rules. Others, meanwhile, appear happy to accept the inevitable and are busy preparing their business models accordingly.

I tend to find myself in the latter camp - not because I believe bridging has become the Wild West of lending, or because it threatens to grow into a dangerous bubble capable of bringing down the global banking system - but because I have serious concerns about our ability to self-regulate effectively and comprehensively.

To be clear, I do not intend this as a slight to the ‘mainstream’ short term lenders – our direct competitors, if you like, many of whom are long-standing and highly reputable businesses – but as an acknowledgement that we together comprise only part of the sector.

Definitive figures remain hard to come by, but anecdotal evidence indicates that a considerable proportion of bridging business is facilitated by introducers and lenders who have no interest whatsoever in publicising their activities, let alone in aligning themselves with one of the sector’s trade bodies and their attendant codes of conduct. While not wishing to tar all with the same broad brush, I believe that some of these organisations or individuals have little interest in ethical behaviour or long term engagement with the sector.

How, then, can self-regulation be applied effectively to them and their activities? 

The FSA, soon to become the FCA, may feel the same way, but I’m not sure it has yet grasped that bridging is not a fully homogenous community.

As Alex correctly identified in her article, bridging is moving ever-closer to the mainstream; with such a move will come new opportunities and wider recognition of the invaluable role which short term lending brings to the British economy. But with great power comes great responsibility and, in the absence of any convincing self-regulatory regime, the authorities are sure to impose themselves.


Leave a comment