Regulating bridging would be a step too far

It’s been a busy year for the regulator. As well as taking over the reins of the consumer credit market and implementing the Mortgage Market Review rules back in April, the FCA has been dropping hints about its desire to increase the reach of its regulation.

The age-old debate of whether the buy-to-let sector should be regulated has reared its head again, following the announcement that loans to ‘accidental landlords’ could be subject to regulation, and now it seems the bridging market is coming under the regulator’s spotlight.
Last month, speaking at the Association of Short Term Lenders’ annual conference, the FCA’s mortgage and mutual sector manager, Lynda Blackwell, told delegates that the regulator still had ‘concerns’ about the bridging market, despite a lot of work having been done to clean it up.
Blackwell also raised concerns about the so-called surge in lending that the bridging market experienced, following the implementation of MMR.
It wouldn’t be a revelation that the sector has not always had the best reputation. Back in the day, bridging was thought of as a ‘backup product’,  an option no one really wanted to fall back on and one which, when taken out, was a last resort and at times could be challenging to exit.
This reputation even at the time was unfair, as is often the case, it was the few who ruined it for the majority. However, the market today is almost unrecognisable to what it once was. Transparency and fair lending are the watchwords, coupled with flexibility and creativity, which are top of most lenders priority list when it comes to creating products.
The market has thrived because it offers something buyers desperately need – a flexible option and the chance to buy some time. This is expected as the mainstream market becomes more stringent. If the regulator was to get involved with the sector, it would stifle creativity and as such, have a negative impact on product development.
It is understandable that the regulator is more cautious following the catastrophic events of the last few years, but being too heavy handed will not make for a safer, more successful market. Indeed, it could have the opposite effect.
Attributed to Ying Tang of the Buy To Let Club

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