The FSA has warned brokers not to be tempted to use bridging for inappropriate cases to shore up their business during difficult times.
At the Mortgage Business Expo in London last week, FSA director of conduct policy Sheila Nicoll told delegates: “We understand the market is difficult for brokers but one repeated concern we have is that current pressures could push people towards solutions best described as imaginative.
“For example, bridging loans have clear consumer benefits in unlocking property chains but they are likely to be a less appropriate option for those borrowers in payment difficulties who may simply be putting off the inevitable by taking out such a loan.”
PMS executive chairman John Malone, who represents brokers on the National Fraud Authority’s mortgage fraud forum, told delegates the bridging sector is a major area of concern at the moment.
He said: “The short-term finance sector is an area of fraudulent activity. It is an area we know the FSA is going to look at carefully.”
Dragonfly Property Finance marketing and operations director Mark Posniak says: “Bridging is not a replacement for long-term finance and it has never been designed to be one. Bridging finance has always been a stop-gap solution for somebody who is between properties and needs finance quickly.”
Brightstar Financial managing director Rob Jupp says: “I think Sheila Nicoll has just stated the obvious. Only a small minority of bridging cases have been used, or attempted to be used, for the wrong reasons.”