Dragonfly hits out at AMI for comments about bridging firms

6 December 2011 | By Natalie Thomas

Sinclair says some brokers are being tempted into placing deals with unregulated bridging lenders by the fees they offer.

He has warned that regulated brokers could lose their Financial Services Authority  licence if they embrace the deal as an unregulated loan.

Sinclair says: “Some unregulated bridging companies have been encouraging brokers to adopt practices they need to think carefully about.”

He believes some brokers are placing deals with unregulated firms in circumstances where their client might be struggling to get onto the housing ladder, but have no intention of selling or moving in the future.

Sinclair says there has been a lot of smoke recently around the bridging market.

He adds: “While I don’t think there is a bush fire, I do think there are a number of small fires.”

But Mark Posniak, head of marketing and operations at Dragonfly, which is currently applying for its FSA authorisation, says: “Such crude criticism of the bridging lending sector is as wrong-headed as it is unfair.

“The majority of bridging lenders take best practice very seriously, and act with integrity and honesty at all times.”

He says anyone who suggests otherwise is either being disingenuous or has misunderstood what bridging loans are about.

He adds: “Most of our customers are professional landlords, not homebuyers.

“Bridging is an alternative source of finance to the loans offered by traditional mortgage lenders. They are not an alternative to long-term loans and mortgages. Any broker who claims otherwise is being reckless or misleading.”

He says there have been rare cases of unscrupulous brokers selling them to borrowers for whom they are not suited.

However, he adds: “But critics who tar the entire bridging loan industry with the same brush are doing a grave injustice to the thousands of brokers who see the loans for what they are - an important tool at their disposal and a means of facilitating property deals that otherwise might not happen.”

Last week the FSA fined a non-advised mortgage firm for inappropriate bridging sales just a week after it warned against such practices.

At the Mortgage Business Expo last month, Sheila Nicoll, director of conduct policy at the FSA, told brokers they should not be tempted to use bridging finance inappropriately to drum up business in tough times, especially for borrowers in payment difficulties.

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