The Financial Conduct Authority is concerned about the unregulated bridging market, according to mortgage sector manager Lynda Blackwell.
Speaking at the Association of Short Term Lenders conference today, Blackwell said the quality of regulated bridging was exceeding the regulator’s expectations, but that the unauthorised market was a problem.
She said: “The regulated side of this market can play an important and responsible part in the mortgage market as a whole. A lot of effort has been put into raising standards and building a sustainable market by regulated bridging firms and the ASTL. They deserve credit for this.
“But we have no insight into the unregulated side of the market. It could make up 84 per cent of the sector today, and that goes largely under our radar.
“Concerns continue to be raised with us about the quality of business practices on that side, and that strategies can sometimes appear deliberately designed to circumvent regulation.”
Blackwell said the FCA was aware of examples of brokers pushing bridging business that should be regulated on to unregulated lenders.
She added: “How much business is not being declared or treated as regulated, I don’t know. The sector needs to take care that business that should be regulated isn’t treated as unregulated.
“Unfortunately the reputation of the good bridging firms in the sector, and the reputation of the sector as a whole, is easily brought down by the less scrupulous firms. So please tell us if there are practices that you think we should know about.”