June 2018
The second joint roundtable between the Financial Intermediary & Broker Association (FIBA) and the Association of Short Term Lenders (ASTL) took place on 14th June at the offices of Howard Kennedy in London.
Following on from the success of the first event, the informal discussion raised some of the key points from the February session with a wider panel of brokers, lenders and solicitors to hear their opinions, track the progress of issue resolution since the first session and determine solid action points for FIBA and ASTL.
Applications
The quality of loan applications remains a significant pain point for both brokers and lenders. Representatives from both groups argued that the submission of a name and a telephone number in lieu of an application should be rejected by the industry as a whole, and that the submission and assessment of an application should demand equal effort from lenders and brokers. It was agreed that lenders must act as a regulatory force for the unregulated market and that they were responsible for setting the standard of applications to avoid a domino effect of negative outcomes caused by sub-standard submissions.
Brokers also queried the transparency in the amount of information required, claiming that although supplying all the necessary information could help speed up the process, too much detail could send the wrong message to lenders. Therefore, the panel agreed that lenders needed to be clear on the type and amount of information they required for a decision in principle – and, as an action point, it agreed that FIBA should collate a list of standard questions and guidelines for initial submissions, which brokers could use as a starting point.
Professional panel
Another discussion point was solicitor services in the specialist market. It was agreed that solicitors shouldn’t accept cases they weren’t set up to deal with – especially when it came to two- or three-day turnaround times in bridging finance – or for which they lacked the necessary sector knowledge. Borrowers need to be guided towards the right choice of legal support for specialist cases, and brokers were claimed to be best placed to provide them with initial recommendations.
On the question of what FIBA could do to help improve the process, the plan to compile a list of recommended solicitors for borrowers was unanimously supported by the panel, combined with the need to categorise solicitors by specialism and for the inclusion of regionally-based firms.
Upfront fees
Further, the discussion touched on the question of upfront fees and what constituted an acceptable charge, which was agreed at approximately £500. However, the panel was generally in agreement that in such a competitive market, brokers needed to have enough confidence in their business to not have to rely on these types of fees.
Industry-wide examination
The final agenda point was the role of trade associations in an unregulated environment and, referring to the question of industry standards, the panel was in agreement that an industry-wide examination for short-term lending would be a viable option to help set expectations, raise the quality of applications and help those just starting out in bridging to get a better understanding of the process and requirements. FIBA confirmed it would be looking at possible options to implement the examination.
The Association will resume its regional workshops in September 2018, with events taking place in Glasgow, Nottingham and Gatwick, as well as taking part in the Commercial Finance Roadshow in October and the Finance Professional Show in November. More information can be found at http://www.fiba.org.uk/events.