FCA spells out expectations for bridgers

Robyn Hall

October 10, 2013

Addressing the members of the ASTL Lorna O’Brien, mortgage policy adviser for the FCA, said business models must be based on treating customers fairly.

She said: “It’s not good enough to keep meticulous records of sale if the product is not right for the customer.”

O’Brien said it was no secret that the FCA had had serious concerns about conduct in the bridging industry in the past.

Credit repair bridging loans sold to borrowers in difficulty, where there was no evidence that the borrower’s situation would improve as a result of the bridging loan, was an area of concern which has been address by the FCA through the MMR.

Also of concern to the FCA, and curtailed by the MMR, was the practice of automatically rolling up of interest on loans; borrowers must specifically elect to roll up fees if this is to be done.

The FCA said the relationship between it and the ASTL had been constructive throughout the MMR process and as a result the rules had been tailored to bridging loans where necessary.

For instance, the firmness of the exit strategy ranks higher than ongoing affordability due to the short-term nature of the loan which had been taken into account under the MMR rules.

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