Benson Hersch of the Association of Short Term Lenders (astl) has stated that the body has refrained from progressing talks on standardised KFIs for non-regulated bridging loans due to regulatory changes to the landscape.
In reaction to the statement, industry heavyweight Alan Cleary of Precise Mortgages criticised the association for its lack of urgency to obtain transparency for clients.
Benson Hersch said: “The concept of a standard non-regulated mortgage information document has not been discussed at ASTL members’ meetings for some time. We do not feel that this is the right time to consider this.
“The EU Mortgage Directive, once implemented in 2016, will bring in the European Standardised Information Sheet (ESIS), providing for a standardised format and the calculation of the Annual Percentage Rate of Charge (APRC).
Despite the European ISIS document being unlikely to affect unregulated bridging deals, Benson maintains: “As a result I feel that it would be premature to incur the costs of consulting on, and implementing, a standard mortgage offer/information document now, only to find that it needs to be changed or altered altogether in two years’ time with the ESIS is introduced.
He added: “I personally do not see this as a current burning issue. In the immediate future the focus will be on the EU Mortgage Directive and on the ongoing fallout from the MMR implementation, as well as the expected more vigorous implementation of the CCA rules following the transfer of regulatory responsibility.”
Astl members agree that the next steps to take on this topic will be to wait and see what is included in the European Union Mortgage Directive Consultation paper when it’s released in September.
In reaction to the statement Alan Cleary of Precise Mortgages told B&C: “There is no thrust from the ASTL or its members to make bridging loans transparent for their customers. Quite the opposite.”
When predicting the market’s reaction to an implementation of the KFI standard across the market, Benson said: “As with everything new, some people will welcome it, some will resent and resist it and the majority will lie in the middle.
“I expect that many brokers will welcome it so that they can provide their customers with like for like comparisons. It will depend how big any recommended changes are and how well they fit in with a lender’s current practices.”
He added: “As the loans are currently unregulated, any proposed form can only be a recommendation and will not be able to be enforced.”
The association stated that recommendations on this KFI concept could be discussed following March 2015. At the end of last year it was reported that the astl would discuss the idea of KFIs for non-regulated deals.
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