Association of Mortgage Intermediaries director Robert Sinclair said the regulator had made it clear it was aware of a number of transactions in the short-term market it would consider regulated that were being done under an unregulated banner.
And he said he wouldn’t be surprised if the regulator was already amassing evidence to crack down on brokers and lenders that have perpetrated these deals.
Brokers and lenders that fall outside of FSA regulation will not be immune either.
Sinclair said: “All parties involved have to be careful – even if a firm is unregulated it has to be aware of what constitutes a regulated loan and if party to undertaking that transaction as unregulated they will be caught under the terms of the Financial Services and Markets Act.
“There is no defence. The FSA can walk in with police and seize files. Who’s to say they aren’t already gathering evidence?”
Alan Cleary, managing director of Precise Mortgages, said: “It is perfectly legitimate for them to want to confirm that firms are not carrying out regulated activities without the appropriate permissions.”
But Christian Faes, director of bridging lender Montello Finance, said he wasn’t surprised the FSA would be conducting visits after “relatively ill-informed comments by Robert Sinclair in the press a few months ago”.
Faes added: “What would surprise us if any unregulated bridging lenders are knowingly doing regulated deals. Why would they do this?
“By doing this the lender runs the risk that the borrower will use this to try and get out of the loan.
“This could mean that the recovery of the loan would be severely at risk which could cause significant financial loss for the lender. Any lenders that are knowingly doing this are just outright stupid.”
Lucy Hodge, director of bridging specialist Vantage Finance, said:“I am sure the FSA would have to have good reason to believe that a broker or lender is involved in this sort of practice before taking extreme measures such as turning up and seizing files.”
The FSA declined to comment.
