The regulator has fired a warning shot across the bows of the unregulated bridging sector after reports of bad practice and active efforts to circumvent regulation were raised with the FCA.
Speaking at the Association of Short Term Lenders conference today the regulators mortgage sector manager Lynda Blackwell praised the regulated side of the market but was damning in her condemnation of some practices in the unregulated space.
She said: “No one knows the size of the unregulated market and the majority of business which is transacted in that space continues to go under our radar.
“Concerns keep being raised with us about practices and strategies that are in place to deliberately circumvent regulations. The same issues keep being reported time and again.”
She pointed to a recent example reported to one of her team. She said a lender had called up following pressure from a broker as to whether a case was regulated or not due to a borrower not living in the property at the time.
The regulator was told that the broker had said several firms were treating the case as unregulated despite the borrowers plans to live in the property – making it a regulated deal – and was claiming the lender was wrong.
Blackwell said: “The lender was right and this was a regulated deal. This makes us worry how much regulated lending is not being declared as regulated – we don’t know.
“The industry needs to ensure that regulated deals are treated accordingly and not as unregulated deals.
“We have an unauthorised business team that deals with unauthorised lenders legally. We rely on the intelligence provided by the market to identify these firms. Please tell us if you come across bad practices and they will be investigated.”
Blackwell was speaking at the ASTL conference at Painters Hall, London.