The Association of Short Term Lenders (ASTL) is seeking to improve standards in the bridging industry and has amended its Code of Conduct to encompass two new areas.
Firstly, all members who do not offer regulated loans and are not regulated by the FCA must state this on their websites.
Secondly, the ASTL is restricting the type of inducement that lenders can offer to brokers. ASTL members must now conform to MCOB inducement rules.
The MCOB rules state that: “A firm must not operate a system of giving or offering inducements to a mortgage intermediary, or any other third party whereby the value of the inducement increases if the intermediary […] exceeds a target set for the amount of business referred.” This includes volume overrides.
It goes on to say that the provider must also quantify, in cash terms, any material inducement it offers to a mortgage broker or a third party and this will need to be disclosed to the customer.
Abiding by the ASTL’s Code of Conduct is a condition of membership of the bridging lender trade body and all members have voted to accept these terms.
Where members do currently have such inducement schemes currently in place, they have undertaken to end them within three months; the same applies to changes to websites.
Benson Hersch, chief executive of the ASTL, said: “The ASTL has always been in the forefront of responsible bridging lending as a result we are raising the bar for bridging lending and our members are providing a professional and responsible standard of which we can all be proud.
“We have raised standards significantly in the past few years, this is just one more move to raise these still further and instil confidence in everyone who works with a bridging lender that is a member the ASTL.”
Jonathan Sealey, CEO of Hope Capital and a fellow member of the ASTL’s executive committee, said: “It is good for the industry that we are all backing transparency and raising standards. The ASTL is really leading the way in this and the respectability of the whole industry is rising as a result.
“It also shows that ASTL members are serious about the Code of Conduct, for everyone to agree to abide by the changes really sets a benchmark.”