There are ‘no stated intentions’ to further regulate the bridging industry

There are 'no stated intentions' to further regulate the bridging industry




It is unlikely that the bridging industry will face stricter regulation, according to the Association of Short-Term Lenders (ASTL), after a price cap saw payday lender Wonga post heavy revenue losses.

Earlier this month, Wonga announced that its revenue had fallen by almost two-thirds in 2015 following the introduction of a lending-price cap by the Financial Conduct Authority (FCA) early last year.

Benson Hersch, CEO of the ASTL said: “Undoubtedly the world of the payday lender will be affected as the government takes an ever closer look at their practices. 

“The effect of this has been reflected in Wonga’s results.”

However Benson remained confident that short-term lenders would be unaffected by further regulation.

“At the moment there are no stated intentions by the FCA to further regulate bridging loans.

“We at the ASTL remain in close communication with the FCA and we believe that the bridging landscape remains stable with a positive outlook for the foreseeable future,” he said.

Sonny Gosai, Sales and Operational Manager at Clever Lending added: "It's good news for the industry that the FCA are working to control the potential spiralling debt of consumers.

“Payday lenders tend to work direct to consumer, so some safeguards may be overlooked, hence the price cap imposed by the FCA.

“While we need to maintain a viable market, it is important that consumers get the right advice.”

Under the 2015 rules, lenders cannot charge more than 0.8% interest per day, default fees are limited to £15 and the total cost of a loan must not exceed 100% of the amount borrowed.

On the other hand, short-term lender QuickQuid said they welcomed the new regulations.

Nick Drew, UK Managing Director of QuickQuid, said: “QuickQuid supports a well-regulated industry, and believes the FCA’s high-cost short-term rules and authorisation process have helped distinguish companies that strive to treat customers fairly from those with less customer-focused practices.

“QuickQuid’s powerful analytics and focus on compliant operations have enabled us to adjust quickly to the FCA’s supervisory approach as we continue to provide consumers with fast, trustworthy credit.

“People want to meet their financial obligations, and our services have helped nearly one million Britons manage their unexpected expenses more comfortably.”

However, Benson said many short-term specialists offered alternatives to high-risk lenders.

“There is a very big difference between payday lenders such as Wonga and bridging lenders that are also called ‘short-term lenders’.

Benson explained that the ASTL was held to their own set of ethics, despite not being affected by payday lender regulations.

“Lenders who are a part of the ASTL abide by a code of conduct and a value charter which says, among other things, that they will act in a professional manner, with honesty and integrity in their dealings with customers.

“They are expected to abide by these standards regardless of whether loans are subject to regulation or not.”

Leave a comment