The Intermediary – September 2026 - Flipbook - Page 70
BRIDGING
Opinion
Regulation must
reflect the realities
B
ridging and
development
finance has grown
considerably in both
size and significance
in recent years. With
that comes greater aention from
policymakers and regulators.
Specialist finance exists precisely
because borrowers and transactions
do not always fit neatly within the
parameters of the mainstream
mortgage market. Regulation must
provide appropriate consumer
protection without inadvertently
restricting access to finance for
legitimate customers.
The Financial Conduct Authority’s
(FCA) Consultation Paper provides
a good example. While much of the
consultation focuses on mainstream
mortgages, several proposals have
implications for this market.
The BDLA has submied a detailed
response, informed by views from
across our membership, including
banks, building societies, regulated
specialist lenders, firms considering
entering the regulated market and
legal specialists.
We met with the FCA twice during
July, including providing a dedicated
briefing on the short-term lending
market. Effective regulation depends
upon understanding how lending
works in practice.
Beyond minor adverse credit
One area that generated considerable
discussion was the treatment of
borrowers with minor adverse credit.
Bridging customers may need to
complete a purchase before selling
another property, be acquiring an
unmortgageable property or require
finance for refurbishment before
refinancing onto a longer-term
product. Against this backdrop, a
single missed payment or temporary
financial setback should not
necessarily define somebody’s future
borrowing options.
68
The Intermediary | September 2026
A borrower who is completely
transparent about a historical issue
could find themselves disadvantaged
compared with somebody who
provides less information. This
can result in additional expense,
delays and unnecessary applications
elsewhere, even where the transaction
is entirely appropriate for bridging.
We have encouraged the FCA
to consider guidance that beer
reflects these circumstances, while
recognising that bridging should never
be used purely for credit repair.
Foreign clarity
Cases might involve borrowers with
significant equity in an overseas
property or clients receiving
income in a foreign currency before
refinancing onto a sterling mortgage.
Some lenders remain cautious
because of uncertainty around
monitoring exchange-rate movements
during the loan. Greater clarity could
give lenders more confidence where
borrowers have received appropriate
advice about currency risk and there is
a robust exit supported by substantial
equity or a sterling Decision in
Principle from a UK lender.
For brokers, that could mean
more options for clients whose
circumstances are sound but fall
outside conventional criteria.
Flexibility in bridging
We welcomed proposals to extend
regulated bridging loan terms from 12
to 24 months. Property transactions
can take longer than anticipated and
development projects do not always
run according to the timetable.
However, treating 24 months as
an absolute limit raises questions.
There will inevitably be cases where
a sensible extension delivers a beer
customer outcome than forcing
N unnecessary refinancing or
possession action.
Consumer Duty should encourage
decisions based upon individual
ADAM TYLER
is CEO of the Bridging &
Development Lenders
Association (BDLA)
circumstances and good customer
outcomes rather than replacing
judgement with arbitrary deadlines.
This gets to the heart of what
makes specialist finance valuable.
Bridging provides flexibility where
circumstances require it, and
regulation needs to recognise that.
Proportionate regulation can mean
greater certainty, more appropriate
options and beer client outcomes.
Constructive engagement
As the sector continues to mature,
constructive engagement between
industry and regulators is increasingly
important. Protecting consumers
and supporting innovation are not
competing objectives.
We are strengthening relationships
with organisations across financial
services and further afield,
recognising that many issues are
shared. There have also been excellent
conversations and meetings with the
British Business Bank, The Bank of
England and within Westminster
itself on the benefits our industry
brings to the economy overall.
Interest in membership remains
strong and we have strengthened our
membership criteria to ensure the
standards expected of members evolve
alongside an increasingly professional
market. We are also investing in
systems to improve communications,
access to resources and engagement.
The common thread is
collaboration. By sharing practical
evidence with policymakers, raising
standards and encouraging dialogue
across the market, we can help
create a regulatory framework that
protects customers without losing
the flexibility that makes specialist
lending so valuable. ●
