Don't resort to unregulated firms to place difficult cases, AMI warns
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Mark Posniak Most firms are honest
The Association of Mortgage Intermediaries has warned brokers against using unregulated bridging firms for regulated business.
Robert Sinclair, director of AMI, says brokers need to guard against unregulated firms that encourage brokers to put regulated business their way in return for a high proc fee.
He has warned that regulated brokers could lose their Financial Services Authority licence if they use these firms to place regulated cases.
Sinclair says: “Some unregulated bridging companies have encouraged brokers to adopt practices that they need to think about carefully.”
He believes that some brokers are placing deals with unregulated firms for clients who might be struggling to get onto the housing ladder but have no intention of exiting the plan in the future.
Ray Boulger, senior technical director at John Charcol, says a few unscrupulous unregulated bridging firms risk tarnishing the reputation of the bridging industry.
He says: “We use unregulated bridgers and some of them can be good. But there have been instances of unregulated providers doing regulated mortgages.
“No doubt this represents a tiny portion of firms, but an industry that is unregulated will tend to attract the odd rogue.”
He backs Sinclair’s warning that brokers must ensure they carry out no regulated bridging business through unregulated firms.
But Mark Posniak, head of marketing and operations at Dragonfly Property Finance, says it is important not to tar all firms with the same brush.
He says: “Most bridging lenders take best practice seriously and act with integrity and honesty.”
Posniak adds that anyone who suggests otherwise is either being disingenuous or has misunderstood what bridging loans are about.
He adds: “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 - a means of facilitating property deals that otherwise might not happen.”
At the Mortgage Business Expo last month, Sheila Nicoll, director of conduct policy at the FSA, told brokers that they should not be tempted to use bridging finance inappropriately to drum up business, especially for borrowers experiencing payment difficulties.
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