FCA: Bridging advice raising red flag
The FCA has raised concerns that regulated bridging finance is being recommended to borrowers in instances where a mainstream mortgage product would have been more appropriate.
Speaking to brokers at the Leeds Mortgage Business Expo Lynda Blackwell, mortgage sector manager at the Financial Conduct Authority, said: “The recent increase in bridging sales makes us worry that bridging finance is being sold to consumers where other financial solutions may be more appropriate – particularly in the post-Mortgage Market Review world where some consumers may be finding it difficult to obtain finance from the mainstream market as readily as they did in the past.”
She praised the bridging sector for its flexibility and the additional choice it offered the market but raised some concern over speed.
She said: “Bridging finance has its role to play in the market helping many customers, for example by enabling chains and transactions to complete when they wouldn’t otherwise.
“The speed and flexibility it brings to the market can be very helpful. But speed is also part of the problem.
“Most consumers in need of bridging finance need it fast and that can lead customers into making the wrong decision, paying anything as long as they can get their hands on the money.”
She called on the sector to “take care to ensure” that cases which should be regulated weren’t being written as unregulated business following the Mortgage Market Review.
She added: “We have an unauthorised business team who deals with unauthorised firms illegally carrying out regulated activities and we rely on the intelligence we get from the market to identify these firms.”