What impending changes, in regards to the incoming FCA, do you think will have the most prominent effect on astl members?

It is difficult to answer this, as the leadership of the FCA will set the tone. When the new EU directives have been absorbed and digested, a clearer picture will emerge.

Once a single body is tasked with the regulatory administration of both first and second charge mortgage contracts on owner-occupied residential property, decisions will need to be taken on how to homogenise processes and documentation. At present, there are differences in both documentation and administration.

It’s also clear that implementation of MMR proposals will have a major effect on how lenders deal with customers. At present, many bridging lenders are not regulated by the FSA, as they do not undertake regulated mortgage contracts, so this will be new to them. The astl has a good and productive relationship with the FSA and we look forward to continuing this with the FCA after the changeover for the benefit of all of our members.

How does the astl intend to prepare its membership for the upcoming regulatory changes?

The astl provides its members with regular regulatory updates and information on EU directives. At our next meeting, a representative of the FSA will be giving a talk on preparing for the MMR sales regime so that astl members can hear first-hand what changes may occur and how it may affect them. This will also give them the opportunity to ask questions of the FSA directly.

In addition to the regulatory updates, we organise frequent presentations from a compliance specialist for members, to keep them updated more regularly on what regulatory changes have happened, what may be about to happen and what members need to do to remain compliant.

Will the astl be placing further emphasis on training and educating its members in the year ahead?

The astl always seeks to keep members abreast of developments. We already provide regulatory training and we have provided information on fraud avoidance this year and given our members reduced price access to fraud software to help their businesses. We will continue in this vein, to make sure that our members are always prepared both for the regulatory and market environment.

One big step forward this year is our new Code of Conduct and Value Charter. This helps to remind both members and the market in general of the standards to uphold when carrying out bridging business.

Do you think working alongside other trade bodies is something that needs to happen in the coming year?

The astl is in contact with complementary trade bodies including the AOBP and the NACFB. As the Chief Executive I am in contact with these other trade bodies on an informal basis. As a result we do meet regularly although we don’t have scheduled monthly meetings. We welcome cooperation and discussion and we think it is very important to meet regularly and discuss what is happening in the market. While it is the role of every trade body to look after the needs of its members, the bridging market place is small and we want to meet the needs of consumers so it is essential that we all work together.

How do you intend to ensure the business streams of your existing members are protected with new lenders entering into the market?

As the market grows and becomes more successful it is inevitable that new entrants will appear. The astl promotes responsible lending and provides a Code of Conduct which should reassure brokers and customers that they can be confident in dealing with members.

The astl is not a regulatory body and has no powers to restrict entry to the market but what it can do is act as a beacon of good practice so that any broker or borrower knows that if they are dealing with a member of the astl they are dealing with a well established and reputable company that they can have faith in.

Are there any systems which you advocate and promote to your members that they should be using?

The astl has recently signed up to SIRA, which is used by almost all the major players in the finance and insurance industries.

The astl has organised a unique situation with SIRA so members of the astl benefit financially, as they don’t have to pay a set-up fee but they still receive all the benefits that SIRA provides. Fraud prevention is a major issue in these difficult times, and lenders need to be vigilant. The astl will do everything it can to assist in this which includes assessing any products which will help in this regard.

What are lenders’ main concerns about the industry and what can brokers/the Association do to improve these worries?

Concerns differ from member to member but a major worry is the increase of fraud. Other concerns include the image of bridging and the sometimes very negative (and sometimes uninformed) press comment. 

The industry is very fragmented, and not all bridging companies follow the standards which astl members uphold. Members who write regulated business do have apprehensions about ever-increasing regulatory requirements, which they consider to be too broad-brush and do not take the short term nature of bridging into account.   

The Association has taken positive steps to deal with these issues and is in the process of taking delivery of an advanced computerised anti-fraud system, which will be rolled out to members at a discounted price. Members have also signed up to a Value Charter, backed by a code of conduct which will ensure that they maintain high standards.  

The astl has regular discussions with the FSA, and the regulator has taken on board several of the Association’s recommendations. I wish to encourage all responsible bridging lenders to join the Association, so that membership will be seen as a mark of quality. I would like responsible brokers, in turn, to recognise this and place business with members. 

What do lenders think is the biggest barrier in the deal process? 

Underwriting methods differ from member to member, but all place emphasis on anti-fraud and anti-money laundering methods. The Association is providing access to a computerised anti-fraud system at a discounted price and it also maintains a suspected fraud register. 

In addition to this, the ever-diminishing number of long term products makes it difficult for some customers to provide a viable exit route; the mortgage industry as a whole needs lenders who are prepared to lend. Some long term lenders seem to be concerned with collecting their book and repairing their balance sheets rather than in making new advances. Long term lending criteria need to be clear and not subject to sudden change. Brokers can assist lenders by providing full information up front which should ensure that there are no delays or unpleasant surprises. 

The astl also proposes on-going relationships with other complementary trade bodies, to mutual advantage. It also needs to make brokers and the public as a whole aware of what bridging is, and when it is (and isn’t) appropriate.

Members are free to set their own terms, and provide their own products, provided that the terms are clear and reasonable. Some lenders provide a range of products, from bridging to longer term loans and some provide services to developers and investors; each lender strives to provide the service its customers want. Products can be designed to meet the specific needs of the customer by, for example, offering staged drawdowns. Products also are arranged to meet the cash-flow resources of the customer.   

As there are many different ways in which loans are redeemed, the method and timing of redemption is an important factor in tailoring the loan to the customer’s needs. The beauty of a bridging loan is that the customer is not locked into a specific term, and the loan can be redeemed early as the circumstances of the customer allow; generally without any early redemption penalty. Each member will diversify as they see fit and as the market changes and evolves, members will be ready to meet new challenges and find new opportunities.