Bridging and personal loan firms may have to employ fully qualified mortgage advisers to continue making first charge loans after N4.
Under FSA definitions, bridging loans, lending for home improvements, debt consolidation, secured overdrafts and credit cards will all be subject to regulation where the security is a first charge over the borrower's residential property.
A spokesman for the FSA says: “Regulation basically applies wherever the loan is the only charge on the house. This includes some forms of personal loans.”
He adds: “We haven't looked at the detail of the actual regime, but if a firm deals in loans classed as first charge on a property they would have to be part of our training and competence regime.”
Neville Freed, managing director of bridging loan provider Commercial Acceptances, says regulation will meet with a mixed response.
He says: “There are a lot of people operating in the industry with a very low regard for the rights of borrowers. This will generally tighten up the industry. Regulation can only be a good thing and improve industry standards.
“It will mean a lot more paperwork and will slow the process down. But at the moment it has been pretty much open season, with the only thing holding people back being the threat of Office of Fair Trading action on unfair credit deals.”