July 2019
By Sonia Shortland, Director at Apex Bridging
Adam Tyler the Executive Chairman at FIBA has taken the decision to publish lenders penalty and extension rates on its online lender directory. I think this is a wise decision and follows an increasing number of examples of some less reputable lenders charging default rates that do not reflect the additional costs that lenders are expected to levy when a case defaults.
Since the emergence of the ASTL in 2012 the professionalism of the sector has certainly been a major agenda item of its members and in an unregulated environment its six point Charter, embracing its code of practice, is expected to be the minimum criteria its members, lenders and associates should follow.
I often define transparency as ‘an understanding of what you are committing to, and does that commitment conform with the detail you have been given during the course of the application.’
The first element of the ASTL charter is “All members should act in a professional manner with honesty and integrity in their dealings with customers.” and without doubt I believe all lender members do all they can in good faith to deliver to these expectations. However, default rates are there to protect the lenders risk profile should the case encounter difficulties and the expected exit cannot be satisfied on time.
It is the quality of the lenders underwriting and risk assessment and the strength of its relationship with the broker introducing the case, that will, hopefully, protect it from having to enforce any default rates.
As Mark Posniak has recently said there is no place for excessive default rates and I fully agree but I am still not convinced that many lenders have the quality relationships that will ensure customers are not exposed to the impact of not having had the implications of the small print explained to them by their broker and lender if necessary. At Apex Bridging we have a very acceptable default ratio and a rate commensurate with industry standards to cover additional default costs, but we do not price on the basis that we will make more from a defaulting case than under our standard terms.
We expect that through a policy of collaboration, communication and education we release funds, confident that the client has completed in full knowledge of all the T&Cs and is very comfortable that we have applied a TCF approach to their circumstances.
At Apex Bridging we are confident that this approach ensures we are complying with my definition of transparency as defined above and that during the loan the client is aware, in those rare cases when default occurs, of the rates and conditions that will be applied.
I would be embarrassed if any of our cases went into default and the client was surprised by the penalty rates imposed to the extent that it generated the response that Mark Posniak got when highlighting the issue a few weeks ago.
The C word is the saviour of bad press and the driver of good broker/client relationships…. ensure your COMMUNICATION is, TRANSPARENT, PROFESSIONAL and most importantly, understood and accepted by ALL STAKEHOLDERS in the transaction. That way quality lenders will generate the repeat and referral business that is the lifeblood of the sector.
For more information on Apex Bridging head over to http://www.apexbridging.co.uk/