The ASTL comments on “ambulance chasers” in bridging sector

The ASTL comments on “ambulance chasers” in bridging sector



As the recession takes hold, the number of claims management companies offering to challenge the legality of loan contracts and get borrowers’ debts written off has, perhaps unsurprisingly, soared. 


Whilst these firms remain controversial, facing a flood of negative press and warnings from the OFT about using misleading statements such as, “80% of credit agreements are unenforceable” and “we have a 100% success rate”; they are now targeting brokers, urging them to go over their previous work, looking for perceived mistakes or technicalities in contracts in return for a fee.


Although the current market conditions are causing many intermediaries to diversify, they are being warned to approach affiliations with claims management firms carefully, as it may make some lenders reluctant to work with them in the future.


Now one claims management firm has targeted the bridging lending sector. The company Credit Issues has launched a specialist legal department to handle cases against bridging and property finance companies.


Aiming to challenge the legality of lenders increasing exit fees and monthly interest rates, the firm has appealed to brokers who have arranged bridging or development finance for clients to refer the enquiry if the borrowers have since gone into default and not redeemed the loan on time.


Commenting on the possible emergence of claims management companies to attack the bridging finance industry, Adrian Bloomfield, the chief executive of The Association of Short Term Lenders (ASTL) said: “The ASTL takes the view that its members have contracts that are transparent, ethical and enforceable and we are not over-anxious about the prospect of challenge.


“Generally, we would express our disappointment and disapproval of any frivolous claims and any artificial attempt to distort, or in any way induce claims where there is no legitimate grievance.”


Mr Bloomfield went on to say: “There will always be ambulance chasers and people scavenging in these markets, pushing and prodding in all corners to see if there is any money that can be wheedled out of people, but I find it difficult to believe that there are enough bridging contracts or potential claims to warrant the introduction of a new industry to challenge them.


“It seems to me that a lot of time, effort and money would be wasted bringing actions that won’t succeed, but we’ll reserve judgement until we see the outcomes of any cases that arise. The obligation remains on ASTL members to have contracts that are legitimate and unchallengeable.”

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