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Fincorp: Boom forecast for short-term lending “potentially dangerous”

Bridging lender Fincorp has issued a warning to industry over the potential long-term damage that could arise from hyping up the size of the market.

Gross bridging lending was forecast to hit £1.5bn by the end of 2012 and continue an upwards trend over the course of 2013.

Fincorp director Nigel Alexander says projections such as these fuels the myth the industry can keep growing exponentially without a deterioration in lending criteria.

He says: “The danger is that every man and his dog thinks he can be a bridging lender and make pots of money. Investors are baying for more business and lenders without experience are taking the money and fuelling the myth that the bridging market can keep growing and growing.

“Well it can. But only because inexperienced lenders start to relax their criteria to get the loans out. We saw that out of control competition in the frothy days of the mortgage market and ultimately it’s the borrower who pays for lender greed. Bridging industry professionals should take a care not to fall into that damaging cycle.”

The Association of Short Term Lending’s figures for 2012 show the total amount originated over the course of the year fell short of this £15.bn projection, instead totalling £1.054bn.

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As we approach the two-year milestone of auto-enrolment, employers have had the opportunity to truly assess the capabilities of their chosen support. They are also now realising that getting to the staging date was the easy part, and that support is required for almost every aspect of the day to day running of their scheme. With the three-year re-enrolment window coinciding for many with the total removal of commission and Active Member Discounts from pension-related products and services, as well as the introduction of the pension charge cap in April 2015, many employers will have no choice but to review their support options. But, what is involved in transitioning your auto-enrolment scheme away from your current support options? This guide from Johnson Fleming aims to outline some of these key areas and provide information and discussion points on what you need to consider.

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