Following considerable media interest, the Association of Bridging Professionals (AOBP) has decided to release the following statements regarding:
1. Its decision to allow non FSA-regulated advisors to join
2. How the Executive Committee was formed
3. Its decision to allow Lender Affiliate Membership
4. The Buy-to-let market and its views on possible regulation
1. Its decision to allow non FSA-regulated advisors to join
AOBP hopes to be inclusive and not exclusive and thereby invites either FSA-regulated intermediaries or CCL holding intermediaries to join the Association.
AOBP believes it wrong to categorise non-regulated brokers and packagers as non-professional.
The AOBP does not seek to regulate its members or provide advice on compliance. Rather, it aims to provide a resource to members, both regulated and unregulated, which will provide them with key information and understanding of what is happening in the bridging industry – an industry which combines regulated and non regulated business.
There are in excess of 60 lenders in the bridging market and the vast majority of lending is on a non-regulated basis, e.g. development loans, buy to lets, commercial and second charge.
AOBP asks intermediaries to be either FSA-regulated or CCL holding because some bridging loans fall under the Consumer Credit Agreement legislation, and not all regulated lenders are licensed to carry out these types of loans, nor wish to do so.
AOBP believes it important to note that these loans are regulated even more tightly in some respects than FSA-regulated loans. The Office of Fair Trading (OFT) has set out standards by which it expects intermediaries to act, and lenders can be held liable for the acts and omissions of intermediaries.
There is a clear need for the intermediaries to act professionally in a CCA regulated environment. In this respect the CCA rules are more demanding since an FSA-regulated lender is not held liable for the acts and omissions of an FSA-regulated intermediary.
AOBP recognises that naturally, in the current market, there is much more opportunity to lend on good quality regulated loans than in previous years when virtually anyone could get a mainstream loan almost as quickly as a bridge.
2. How the Executive Committee was formed
AOBP’s Executive Committee was formed by members of the industry, and those associated to the industry, who identified a need for a unifying association.
Each Executive Committee Member brings specialist knowledge and experience acquired from their professional lives. Some members have experience in engaging with the FSA and the Committee hopes to work closely with the National Association for Commercial Finance Brokers (NACFB) on lobbying the authority and other bodies.
3. Its decision to allow Lender Affiliate Membership
AOBP is targeted primarily at the intermediary, packager and master broker community, all of whom can join as Associates. It also has Affiliates that work in bridging, including surveyors, solicitors and lenders. Just as the NACFB has lenders as Patrons, so too does AOBP have lenders as Affiliate Members.
AOBP believes the support and interaction of lenders is vital if the Association is to be a success. The key to ensuring AOBP works as a successful body is by ensuring that all bridging professionals work together and not against each other.
AOBP believes that dialogue between lenders and introducers is important for the growth of the industry. There are specific associations for lenders and brokers, but until now there has been no association specific to bridging which enables “cross-party” dialogue that allows each party to hear and react to the other’s concerns.
AOBP will help to break down walls that have hitherto existed, and the successful take-up from both intermediaries and lenders confirms there is a void to fill.
4. The Buy-to-let market and its views on possible regulation
AOBP believes it is by no means certain that BTL will be regulated by the FSA. The mortgage industry has given very strong, well reasoned arguments as to why regulating BTL would not solve the problem that is borrowers not understanding the investment risk, since regulating borrowing does not address this issue.
At this stage AOBP believes there is only a 60-40 chance that the FSA will regulate BTL and that this is not likely to happen soon, as the question of regulating secured lending currently sits higher on the FSA’s agenda.
The original plan to move secured lending to the FSA’s remit is now being reconsidered as part of the Treasury review on CCA-regulated lending. AOBP believes it likely that the FSA will not get BTL reviewed until the secured lending question is decided, therefore postponing the BTL decision by a couple of years.
AOBP would like to highlight that if BTL does become regulated, the FSA will need to allow for a transitional period to allow for all non-regulated lenders and intermediaries to apply to become regulated.
At present it takes about nine months for a new lender to become authorised at the present time. Existing regulated lenders will also need time to change their systems to meet the new standards.
AOBP will be utilising its resources to continue investigating and monitoring the position very closely, and thereby providing its members with the latest news and thoughts as the Association receives it. AOBP members will reap the benefit of receiving the very latest information on the BTL question, as well as other issues, having access to practical comment from trusted and experienced sources.
The bridging market continues to evolve at a fright
