Bridging Watch

Phil Jay

I would like to start this article by drawing your attention to an event which I believe demonstrates the positivity that drives the bridging market, namely the news last month that Masthaven Finance have been granted their retail banking licence.

I and probably many others have sent personal congratulations to the directors of Masthaven Finance on the great news that Masthaven Bank will be open for business in 2016. However, I wanted to mention this important event, not just because they deserve personal congratulations, but also from the perspective of the bridging market this is a particularly noteworthy event to see one of ‘our own’ make the step to banking status. I think that this success is at least partly due to the strength of our market and the innovative and entrepreneurial spirit which it embodies.

Masthaven Finance has been one of the most successful bridging lenders since the post 2008 credit crunch and along with others, has done so much to champion short term finance and its uses to the intermediary market. Having moved into second charge lending in the last few years, Masthaven announced itself as an important multiple channel lender. I am in no doubt that the path being trodden by Masthaven will act as an example to others to show that there is no barrier to aiming for the top table if you have the right proposition, conditions, ambition and personnel. Congratulations again!

While we are on the subject of lenders, it has been encouraging to see results from two of the newer lenders in the bridging firmament, who are enjoying a great start to the year. Mint Bridging has reported an 820% increase in its loan book compared to Q1 in 2015, while Roma Finance are claiming a 300% increase over the same period. Although we do not know from what point in numbers they were coming from it is difficult to know precisely what it means in both volume and numbers. However, talking to other lenders in the sector, all of them are talking about increases in new business volumes. So it has to be acknowledged that as we adapt to a post MCD world, the bridging market looks to be in fine shape.

As we look at what that world is going to mean with the MCD in place, I would venture to say that with a now well established lender base and the fact that bridging and its uses are so much better understood, the future is bright. It is also worth thinking about how much more the sector’s reputation will be enhanced as more of bridging on the consumer side becomes regulated? While I believe that there is a need to ensure that commercial bridging does not require so much regulation and increased compliance, FCA regulated brokers will be more comfortable recommending bridging products which now have the comfortable tag of being ‘regulated’.

Complete FS has always argued that regulation had three distinct goals. The most talked about is the improvement of customer care and protection and there is no doubt that is the part on which people concentrate. Alongside that, the second goal is the improvement of the level of professionalism for both advisers and lenders. Lastly and a part which tends to be ignored, is the way in which regulation has managed to shine a light into some of the darker corners of the bridging industry. Slowly but surely it has ensured that those very small lenders which kept away from the limelight and whose terms and conditions were opaque at best and anti-consumer at worst, have in the main withdrawn from the market.

So when anyone complains about regulation and asks “What did regulation ever do for us?’ in that Monty Python style, we can say that customers are better protected, the industry has become more professional and the bottom feeders which populated the lower reaches of the bridging market have crawled back under their stones.

Yes, we have to contend with more paperwork and it is important that our trade bodies continue the great work they have been doing to ensure that the red tape does not overcome the validity of customer protection so as to become unworkable.

I am confident that common sense and the willingness of regulator and regulated to act in the best interests of the customer will prevail, while also ensuring that the industry has the room to continue to innovate and thrive.