The Association of Short Term Lenders has clamped down on inducements in an effort to raise standards in the bridging industry.
The trade body is restricting the type of inducement lenders can offer to brokers, stating they must now abide by MCOB rules.
MCOB rules state: “A firm must not operate a system of giving or offering inducements to a mortgage intermediary, or any other third party whereby the value of the inducement increases if the intermediary […] exceeds a target set for the amount of business referred.” This includes volume overrides.
Moreover, the lender must also quantify, in cash terms, any “material inducement” it offers brokers to a third party and this must be disclosed to the customer.
Further, all members who are not regulated by the FCA must now state this on their websites.
All members of the ASTL have voted to accept the terms.
ASTL chief executive Benson Hersch says: “The ASTL has always been in the forefront of responsible bridging lending as a result we are raising the bar for bridging lending and our members are providing a professional and responsible standard of which we can all be proud.
“We have raised standards significantly in the past few years, this is just one more move to raise these still further and instill confidence in everyone who works with a bridging lender that is a member the ASTL.”