I’m sorry, but am I missing a point here? Surely if you are a ‘regulated broker’ as I would think the vast majority of readers are, isn’t buy-to-let already regulated under ‘Treating Customers Fairly’ (TCF)? It would be interesting to know just what percentage of the 200 intermediaries questioned were non-regulated brokers.
As we are all aware, it’s the broker firm that is regulated, not the product. This, as it implies, means that although a regulated broker who is dealing with say, a buy-to-let mortgage, could on the face of it, consider it correctly, that the product here is a non-regulated product.
Nevertheless, he still has to follow the same guidelines as if it was a regulated mortgage and take the necessary steps to do the research and record the findings. You only have to look at the recent experiences the FSA has had with non-conforming mortgages regarding record-keeping.
The FSA is trying to indoctrinate TCF into all the aspects of the company and therefore covers all customers, not just those applying for regulated products, including bridging finance, or commercial loans.
The question is when considering any customer’s financial request, is whether the regulated broker has followed the following four principles enough?
- Principle five – Market Conduct: A firm must observe proper standards of market conduct.
- Principle six – Customers Interests: A firm must pay due regard to the interests of its customers and treat them fairly.
- Principle seven – Communications With Clients: A firm must pay due regard to the information needs of its clients and communicate information to them in a way which is clear, fair and not misleading.
- Principle nine – Customers Relationships Of Trust: A firm must take reasonable care to ensure the suitability of its advice and discretionary decisions for any customer who is entitled to rely upon its judgment.
Therefore, if you are regulated you have to be able to offer either ‘whole of market’, or a ‘panel’ which has to be representative of the whole market and reviewed regularly. Therefore as we are aware that there are over 60 such bridging lenders in the UK market, the more lenders there are, the more research and record-keeping the broker has to do to satisfy both their network – if they have one –and the FSA.
It would therefore seem that the only safe way for a mortgage broker to place bridging finance, is with a specialist bridging finance broker who has been approved by the FSA. This not only enables the broker to have the comfort that the bridging finance has been placed with a company that has the systems in place to meet the client’s needs, but also that it has been placed under the umbrella of the specialist broker when it comes to the FSA.
Indeed, based on the above, you may wonder just what actual percentage of bridging finance, both regulated and non-regulated placed since ‘Mortgage Day’, has indeed followed the MCOB/TCF rules?
I would suggest very little.
It seems to me that people just haven’t woken up to these issues yet or they are just burying their head in the sands hoping it will go away. I may be wrong with this assessment, but I have yet to find anyone that is in disagreement with me over my understanding of these situations. If anyone knows differently I think the market would be interested in hearing their views.
Mark Hutton
Bridging Direct Ltd
