Bridging loans association to be launched

The Short Term Funders Association (STFA), the body claims that it has already received support from around 50 per cent of short-term funders in the UK. The STFA is now appealing for other interested lenders to come forward with support for the formation of the association.

Cheval Property Finance and Excel Securities are leading the drive to found STFA. Sydney Cohen, business development manager at Cheval, said, "There has long been a need for short-term funders to promote the generic benefits of their own sector to intermediaries and to have a unified voice in general industry issues. In the run up to regulation, other trade associations and strategic partnerships have formed and gained strength and the time is now right for short-term funders to do the same."

Residential bridging loans will be covered by FSA regulation, but so far, have had no unified body to represent the sector in discussions with the government or other trade associations. As things now stand, the rules governing bridging loans are the same as those governing long-term mortgage lenders.

"If short-term lenders had possessed a common voice during the consultation process for regulation, we could have ensured that the Mortgage Conduct of Business rules took account of the separate nature of short-term funding," added Cohen.

Cohen admits that there may be some bridging loan lenders who would not consider joining an association at the moment because they only lend on commercial property which falls outside FSA regulation. But he points out that commercial lending is likely to come under greater scrutiny in the future, so the added benefit of a trade body will be beneficial.

A spokesperson from a leading specialist mortgage provider said, welcomed the move. "We support any movement within the industry that promotes best practice. An association or recognised body for the bridging loan market appears to be a positive move. It would not only highlight the opportunity to use bridging finance to the housing market, but also provide support to industry members in the future non-regulated environment."

A spokesperson from a leading bridging loan company said, questioned whether a regulatory body was really needed when the FSA would be regulating the sector. "Any regulatory body should be welcomed but it has to be managed effectively. Further information really needs to be known about the new Association and how it believes it can improve on FSA regulation."

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