Clear. Fair. Not misleading.
Four words thrown down to the consumer credit market by the Financial Conduct Authority in April this year.
We knew they were coming years before they arrived. Lenders across the bridging market have based their entire marketing strategies on being the best and most regulated that they can be.
And yet, I read with dismay a story in one of our industry’s trade papers that the FCA is still worried about how consumer credit firms are promoting themselves.
A lot of the problems they refer to are for lenders that have nothing to do with bridging admittedly – debt management firms and logbook lenders appeared to be among the worst offenders – but there was one concern that particularly caught my eye.
The regulator highlighted “promotions that guaranteed firms would provide credit regardless of customers’ circumstances” as being unclear, misleading and definitely not fair. Although I would hope that none of the professionals who operate in the bridging market would advertise their services to customers using such fantasy to entice deal flow, I continue to worry there is an undercurrent that touches our sector and which hasn’t yet fully let go of that past attitude so rife in the pre-Credit Crunch era.
There are really quite visible advisers out there who encourage customers to use second charge loans as a means to consolidate debt.
Of itself, this is not bad advice and in fact, it might actually be the right thing for the customer to do.
The problem is when it’s not the right thing for the customer.
As the type of advertising that’s caught the attention of the FCA shows, clearly there are enough people without scruples who are prepared to take advantage of the vulnerable.
Now, why is this relevant to bridging I hear you ask? Well, directly it’s not.
There are enough big and professional lenders, now populated with professional people who have come from banking, retail mortgage lending, private equity and even hedge fund backgrounds that I think we can consider ourselves a professional marketplace.
It is good to see so many bridging lenders sticking up for the right way to treat customers. It has become a battleground on which lenders compete for business – and that has to be good for clients.
As one who has worked in bridging for many years, and since long before it became the gold rush it is now considered, it is also extremely satisfying to see so many professionals making a success of bridging and trade bodies such as the Association of Short Term Lenders and Association of Bridging Professionals working tirelessly to maintain standards at a high level.
It might have taken some time, but I really believe that as an industry we are so much further down the professional path than we were even just three years ago.
We should take a moment and perhaps give ourselves a tentative and collective pat on the backs.
But – of course there’s a but – the fact is that there remains an undercurrent beneath all of the good work that so many of us in this industry are committed to.
There are still questionable practices around remuneration of brokers which aren’t always made transparent to borrowers.
There are still shady fees being applied to deals that continue to catch borrowers unaware.
There are still those deals being touted round the bridging market that no lender in their right mind will touch, but which nevertheless we see and throw out.
We have come a long way.
But as this latest announcement from the regulator reminds us, there’s no room for complacency.