FSA issues warning to Association of Short Term Lenders
By Bridging Loan Directory -
The Financial Services Authority has warned short-term lenders not to offer override commission on regulated business after concerns over their practices towards unregulated loans.
It is rumored that a number of bridging lenders provide brokers and packagers an ‘override’ or additional commission if a certain level of business can be put through them.
Adrian Bloomfield, chairman of the ASTL, says: “We advise our members that the FSA’s position is that override commissions contravene regulations on regulated loans. We also say that on unregulated loans the regulator is not in favour of it.The FSA believes it is to the consumer’s detriment because they encourage brokers to direct business to certain lenders.”
Ray Cohen, managing director of Jackson Cohen, says that the FSA doesn’t like it but can’t do anything about it on unregulated business. He says: “The FSA issued a warning to the ASTL saying that its members shouldn’t do this on regulated loans. Big name lenders, including high street banks, offer override commissions, particularly on commercial loans with some disclosed and some undisclosed to clients.”