ASTL members will no longer be able to offer brokers inducements based on a set amount of referred business after the trade body amended its code of conduct.
In a second change to the code members that don’t offer regulated loans and are not regulated by the FCA will have to say so on their websites.
ASTL members voted to abide by the code. Lenders with offending inducement schemes will end them in three months and the same applies with the website change.
Benson Hersch, chief executive of the ASTL, said: “The ASTL has always been in the forefront of responsible bridging lending as a result we are raising the bar for bridging lending and our members are providing a professional and responsible standard of which we can all be proud.
“We have raised standards significantly in the past few years, this is just one more move to raise these still further and instill confidence in everyone who works with a bridging lender that is a member the ASTL.”
The inducement change is based on Mortgage Conduct of Business rules from the Financial Conduct Authority, which state: “A firm must not operate a system of giving or offering inducements to a mortgage intermediary, or any other third party whereby the value of the inducement increases if the intermediary… exceeds a target set for the amount of business referred.” This includes volume overrides, while the rules also state that providers must quantify in cash terms any material inducements they offer to mortgage brokers and third parties and these must be disclosed to the customer.
Two ASTL executive committee members, Brian West, head of sales for Central Bridging and Jonathan Sealey, chief executive of Hope Capital, said it will raise standards and promote transparency.
West said: “The resulting changes to the code of conduct really underpin the ASTL’s ongoing quest to promote best practice and raise standards in the bridging industry.”
Sealey added: “The ASTL is really leading the way in this and the respectability of the whole industry is rising as a result. For everyone to agree to abide by the changes really sets a benchmark.”