FCA mortgage and mutual sector manager Lynda Blackwell says the regulator still has lingering concerns about the bridging market despite the big strides made to clean up the sector.
Speaking at the Association of Short Term Lenders’ annual conference in London today, Blackwell said the regulator remains concerned that bridging loans are being offered when a mainstream loan would have been more appropriate.
She said: “There is no doubt the FCA regulated bridging sector has come a long way but concerns linger around the bridging market.
“One of the concerns we have is consumers taking out bridging finance when a mainstream mortgage product would have been more appropriate. The MMR has introduced a new requirement that where advice is given, the seller must determine as part of the sales process why a mainstream product is not [appropriate].”
Blackwell also said the FCA is concerned bridging finance is being used as a credit repair product where lenders claim a short-term loan will repair a borrower’s credit rating to the extent that they can take out a mainstream mortgage in the future.
She added: “It is too speculative unless the lender has concrete evidence about a guaranteed mortgage offer.”
Blackwell added that the FCA remains concerned about non-regulated lenders.
She said: “Our rules do not protect consumers who take out loans from non-FCA regulated firms whose activities and sales practices remain a concern for us.”
Separately, Blackwell said the FCA welcomed news that the Institute of Financial Services is creating a new qualification specifically for bridging advisers.