The FCA has concerns about unregulated activities but all firms that operate fairly should have nothing to fear
There has been much talk about the FCA’s consultation on a mission statement, particularly regarding its potential intervention in unregulated activities.
While some people have taken this to mean unregulated bridging will now come under the regulator’s remit, the key focus will remain protection of the consumer – in particular, the vulnerable consumer.
The executive summary states: “Many of the problems … have been caused by regulated firms undertaking activities which are outside our ‘regulatory perimeter’.”
I do not believe the FCA has an appetite to look only at firms undertaking unregulated activities. By its own admission, it has “limited resources” and must prioritise their use where they can have the biggest impact.
At our recent conference, FCA mortgage sector manager Lynda Blackwell was specifically asked by a delegate whether the FCA intended to regulate more of the bridging industry.
Her answer was that, while the regulator was “operating in the dark” where the unregulated sector was concerned, any further regulation was for the Government to decide. Indeed, where firms engage in activities that are illegal or fraudulent, or have the potential to undermine confidence in the UK financial system, the Government may choose to widen the scope of the FCA’s responsibilities.
At this stage, there seems to be no appetite for increasing regulation. But, of course, any financial scandal could change this overnight.
We have worked hard to raise standards to ensure lenders operate transparently and responsibly, with every member signed up to a code of conduct. The risk to the bridging sector comes from the lenders that do not subscribe to these principles.
It is more important than ever for lenders to operate in an open and ethical way. The FCA clearly has a concern about unregulated activities and is rightly keen to avoid any consumer detriment. All firms that operate in a fair way should have nothing to fear.
Benson Hersch is chief executive of the ASTL