The bridging industry seems to have come of age in the last year. It is now considered a serious option for finance by both consumers and borrowers in a way that it may not have been in previous years. CEO of the Association of Short Term Lenders (astl), Benson Hersch, explains what the trade body has been up to and its role in providing a benchmark for representation…

The fact that the FSA has consulted with the bridging industry regarding new regulatory proposals is indicative of how seriously the industry is now taken. The bridging market also seems to be gathering momentum with several new lenders having sprung up in the last year or two. There has also been an increase in the number of brokers who offer bridging.

astl

The Association of Short Term Lenders (astl) is the sole trade body specifically representing bridging lenders. Whilst it has had mixed fortunes in the past few years, I think that 2013 is the year where it will come of age.

Positive developments at the astl in the last year have been remarkable. We played a serious part in the consultation of the Mortgage Market Review and continue to meet with the FSA regularly. We have also set up a sophisticated fraud detection software package for members to help reduce and eliminate fraud and, we elected a new committee to help take the organisation forward. In addition, we have published figures to give serious information on the bridging market.

Value Charter

Perhaps one of the things that will have the biggest effect going forward is the introduction of a Value Charter, reflecting the code of conduct and rules that all our members must comply with. We have also updated both the code of conduct and membership rules and these are accessible to all via the astl’s website, which has been revamped and updated. In doing so we are setting a benchmark. At a time when more and more firms are entering the bridging market, our Value Charter and code of conduct sets astl members apart from the rest.

The astl code of conduct charges members to act in a professional manner, with honesty and integrity in their dealings with customers. This means that that brokers and borrowers who deal with astl members can be confident they are dealing with serious companies with reputable standards.

Success

The astl has had significant success in working with the FSA on the Mortgage Market Review. Some of our successes include agreement by the FSA to identify regulated bridging loans as a class of mortgage in their own right and the definition of these as ‘a regulated mortgage for 12 months or less’. Other results include acceptance that some bridging loan cases will not require evidence of income to be obtained, specifically where the borrower makes no payments during the term and the exit is a sale.

We also achieved agreement that an execution-only sales process can be used for extensions where no further monies are being advanced and that advancing further retained interest or rolling up interest would not be classed as a new loan. Finally, there will be no requirement for an interest rate stress test, acknowledging the importance of underwriting the exit route.

Membership

Membership of the astl is still relatively small; but we aim to light a beacon of good practice so that more responsible lenders join. We have set out our stall as the organisation that represents responsible bridging lenders, and also as an organisation that campaigns for the use of responsible short term lending amongst the regulator, other trade bodies and consumers. Our aim is to encourage brokers and borrowers to choose astl members when looking for a bridging loan.

If we can achieve what we have in the last year with 23 members, just imagine what we could do when more lenders, who are serious about doing business properly, join the Association.