Major distributors are seeking to protect themselves against bridging fraud by teaming up with regulated lenders.
Last week, seven distributors agreed a partnership with Precise Mortgages.
Precise is now a preferred bridging lender for Ingard Financial, Mortgageforce, Pink Home Loans, Personal Touch Financial Services, PMS, Sesame and SimplyBiz Mortgages.
The Financial Services Authority undertook a major review of networks’ processes last year, leading them to tighten their systems.
John Malone, executive chairman of PMS, says the regulator’s checks mean all distributors are carefully managing their fraud systems.
He says: “Risk and fraud management are high on the list of FSA priorities. There is significant fraud in the bridging sector and it is a big concern so distributors have to be absolutely certain when dealing with a lender.
“In some cases, bridging is taking the place of sub-prime and self-cert.”
Malone says Sesame and PMS are working with other lenders as well as Precise.
Nikki Howarth, sales and marketing director at Ingard, says the unregulated market poses risks for brokers and clients.
She says: “We are protecting Ingard from potential fraud, but also, more importantly, providing a product that protects our customers and has transparent fees.”
The move comes after the Association of Mortgage Intermediaries issued a warning to regulated brokers to be wary of using unregulated lenders.
Alan Cleary, managing director of Precise, says he is trying to clean up the bridging market as it is a minefield for borrowers.
He says: “Many bridging lenders have a different view of what the word transparent means.
“There is a myriad of interest and fee-charging methods, many of which are not good for borrowers. This is compounded by the inconsistent information provided to borrowers, which makes deal comparison almost impossible.”