The UK’s financial sector is one of its key powerhouses; businesses from London to Leeds to Edinburgh provide funding around the globe, circulating millions of pounds through the economy and keeping the nation healthy, secure and stable. One of the key sectors in the industry is short term finance, the term given to lenders who provide funding to businesses and individuals over short periods of time, often in the form of “bridging” loans.
A bridging loan is a type of finance that is used to provide cover between two types of long-term loan. This type of funding is extremely flexible, and can be used in a variety of circumstances; for example, a couple of pensioners may find the ideal retirement property, but be unable to sell their current home in order to fund their new purchase. In this case, rather than missing out on the right home for them, they could apply for a loan to bridge the gap between their old mortgage and their new one – they can then sell their old property at their own pace, without having to cash it in quickly and accept a low price. Bridging loans don’t stop there, though; many bridging professionals offer loans to cover industrial and commercial development, allowing businesses to grow and expand without waiting for long term financial solutions to be put in place: this is especially useful in the construction industry, where firms are often unable to arrange long-term finance until construction has begun.
Clearly, the world of bridging finance is one that’s valuable to the UK economy, thanks to the options it provides, but as with any industry its interests need protecting. The Association of Bridging Professionals is an industry body formed to protect and promote the interests of the bridging finance sector, and they fulfil several important functions to maintain the stability of this vital area.
The Association of Bridging Professionals was formed in 2010, with the intention of improving the state of the bridging finance industry through closer integration and representation. Formed from a dozen of the top professionals within the industry, the AOBP includes representatives from the worlds of mortgaging and short term finance to provide a balanced and comprehensive executive committee. The AOBP has grown substantially since its inception, and now represents the bridging finance industry at key Government meetings to protect the sectors interests. In addition to working on behalf of its members, the AOBP also seeks to strengthen the bridging finance community by bringing lenders together at annual conferences, to allow members to share insights and ideas. The creation of a public forum is central to the AOBP’s mission, as it helps to develop the bridging finance industry into a cohesive community, with all of its members working together for mutual benefit.
The AOBP’s goals are far-reaching, but in the years since its establishment it has worked tirelessly to fulfil them, and although it’s still a relatively new organisation it’s fast becoming a major player within the financial sector. The Association of Bridging Professional’s key objectives are outlined here:
Financial regulations can have a severe impact on the way in which bridging companies do business, and Government policy can often require changes to the rules in order to enforce their manifesto. Bridging professionals can find it difficult to anticipate these changes in law without recourse to a primary source, and instead are limited to hearsay and secondary information; the AOBP liaises directly with the UK Government’s regulatory bodies to ensure that its members are kept up to date and fully informed on developments straight from the source, rather than filtered through multiple news outlets. In addition to this, the centralised nature of an industry-representative organisation such as the AOBP allows it to easily notify members of changes to industry regulations, ensuring that they’re able to adapt for upcoming legislation instead of trying to respond to it.
This is the other side of the representation coin; not only can the AOBP inform its members as to what the Government is going to do, but they can also influence the implementation of new laws that could potentially harm the profitability of the bridging finance sector. This is one of the key benefits of forming an organisation to represent an industry; by doing so, your members are able to protect themselves by uniting and creating a stronger collective voice. This doesn’t mean that the AOBP is meeting with the FCA and bullying them into submission; the FCA’s job is to promote financial stability and consumer confidence, which are the underpinning principles of any good business. These interests coincide with those of the bridging finance community: where the AOBP comes in is providing advice and detail to these Government bodies, highlighting areas of concern which have the potential to damage bridging lenders.
In any industry there is a temptation to reach for success by stepping on the heads of others. However, this can be detrimental to the health of the industry as a whole, and creating an atmosphere of trust and co-operation allows good ideas to be shared between businesses for mutual benefit. The AOBP achieves this by bringing the industry together for annual meetings, where fee-paying members are entitled to schedule topics of discussion and to put questions to a board of experienced professionals. For example, at the 2016 conference, fee-paying members were able to ask questions of a board of specialists from a wide variety of relevant industries, with representatives from peer to peer lending firms and surveyors as well as from mortgage brokers and short term financiers.
For an industry to be successful, it must maintain customer trust, and with a product which is as potentially obscure as bridging finance it’s very important to place customer satisfaction at the forefront of each and every business transaction. Due to the complex nature of some bridging finance products, customers can find it difficult to determine what the right deal is for them; the AOBP seeks to promote ethical standards within the industry to develop a reputation for fair trade.
The Association of Short Term Lenders is a similar organisation to the AOBP, which represents the interests of the short term lending community. Created in a similar way, for a similar purpose, the two organisations co-operate closely together to ensure that there are no issues raised between the two groups, with a dedicated member of the AOBP’s Executive Committee handling communication between the two groups. Because of the close knit nature of the short term finance and bridging industries, many businesses are members of both groups – this, of course, allows them to take advantage of a wider range of networking opportunities, and to benefit from greater access to regulatory updates.
With the recent creation of the Financial Conduct Authority in 2014, replacing the Office of Fair Trading, the short term finance industry has been warned to anticipate stricter enforcement of rules and regulations. In partnership with the Consumer Credit Service, the AOBP have created the “Compliance Hub”, a centralised hub for short term financiers to check up on the latest regulations, and to ensure that their compliance is up to date. In the fast changing world of consumer credit, it’s easy for businesses to be caught out by new regulations; this quick and easy method for overseeing your business’s compliance is invaluable, and could potentially help bridging financiers avoid costly fines and penalties.
The many benefits of the AOBP are open to bridging finance professionals, but there are a number of criteria which must be fulfilled before approval is granted. Essentially, what is required is a full disclosure of the business and the individual’s details, in order that the AOBP can ascertain that membership is being legitimately sought. For commercial mortgage and buy to let brokers, the AOBP will also require proof of three offers of loan from different lenders – this acts as a track record, to ensure that businesses which apply to become AOBP members have the level of professionalism which the AOBP seeks to promote.
In order to reflect the different sizes of its members’ businesses, the AOBP offers several “tiers” of membership; the bridging finance sector comprises of many different businesses, some of which are much larger than others. To create a fully representative forum, the AOBP needs to find a way to include smaller businesses as well as large ones, to ensure that their concerns are heard and that their needs are met. Therefore, there are several different options on offer to prospective members:
This entry-level membership is free, but still comes with some significant benefits; firstly, the Blue Associate is entitled to display the AOBP membership logo on their website – this reinforces the trustworthiness of the business to customers, and shows that they’re a proven business with a strong track record. In addition to this. The Blue Associate is able to attend the Annual Meeting of the AOBP, where they will be able to network with other members of all levels and gather valuable information on the state of the industry. As a member, the Blue Associate is also entitled to receive the AOBP’s monthly newsletter, which details all the ongoing developments within the bridging finance industry, and they can also raise issues with the Executive Committee. The Blue Associate membership, though entry-level, still provides great value, as it allows members to access all the information and representation which higher tiers do, making it a great choice for smaller bridging professionals.
Becoming a Silver Associate provides all of the benefits of a Blue Associate, and a number of benefits above it, but it does incur an annual fee. In return for this charge, the AOBP offers Silver Associates a prominent listing within their online directory, which is a powerful way of improving a business’s profile in a crowded marketplace. The AOBP also provides Silver Associates with access to their quarterly meetings, where fast-paced developments within the industry are discussed – Silver Associates are also able to table issues at these meetings, and are provided with speaking opportunities. This means that Silver Associates can become more involved in the bridging professional community, helping to determine the course of internal developments and raising awareness of issues which concern them. Members of the Silver Associate tier are permitted to use the silver version of the AOBP logo on their website and promotional materials, demonstrating to customers that they are sufficiently invested in the industry to take an active interest in its welfare.
The AOBP recognises that developments within their industry have an impact that reaches further than bridging finance, and as such is of interest to members of related professions; for example, experts on financial law and surveyors may well find value in membership of the AOBP, even though they aren’t strictly bridging professionals. To accommodate this, the AOBP has created the “Affiliate” tier, which provides all the benefits of a Silver Associate membership for the same price, but adjusts the membership criteria requirements. The only difference between the Affiliate and Silver tiers is the placement of their listings on the AOBP website – visitors looking for a bridging finance broker won’t appreciate having to sort through multiple entries for solicitors and surveyors, so the Silver and Affiliate listings are segregated.
The benefits which are offered by the Blue and Silver Associate tiers are largely one-way; they grant access to more meetings, more involvement, and greater visibility. However, the AOBP is able to offer access to its database for Associate Lenders, allowing them to conduct email marketing using contact addresses gathered from its numerous primary and secondary sources. This isn’t the only benefit to this top tier of membership, however, as the AOBP also allows Associate Lenders to gain PR and press opportunities in their monthly newsletter; this is a powerful form of advertising, as the newsletter is not only being sent directly to bridging finance professionals, but also benefits from the authority of the Association of Bridging Professionals. Finally, Associate Lenders also have the right to place a custom survey query on the AOBP website, which again benefits from high quality traffic and strong authority. Of course, Associate Lenders are provided with a gold AOBP logo for all their promotional materials, but all these advantages come at a higher price than that of the other tiers.
The AOBP’s authority stems from its representation of the bridging finance industry, and as such, the quality of its leadership is paramount to ensuring it is well respected and trusted. To this end, the AOBP’s Executive Committee is made up of twelve of the industry’s most respected practitioners, with a wide field of experience to draw upon. To make sure that all aspects of the industry are covered, the Executive Committee has members who specialise in different fields of the AOBP’s responsibilities: aside from the AOBP chairman there is a Compliance Officer responsible for the industry’s adherence to ongoing regulatory updates, several Lender Liaison representatives whose job it is to act as a point of contact between bridging lenders and the AOBP, and a dedicated AOBP Legal Representative.
By establishing a highly qualified Executive Committee, the AOBP is able to demonstrate to both regulatory bodies and consumers that it is an organisation worthy of trust, which is empowered to act on its members behalf.
Since its inception in 2010 the AOBP has had to navigate an especially tough period in the nation’s financial history, and has helped to maintain the bridging finance industry as a growing sector of the financial market. The need for strong leadership and effective liaison with the FCA and Bank of England is not going to diminish in the future, though; the UK economy is still on the road to recovery and the necessity for short term finance is still very much on the rise. As such, the industry will continue to require a strong source of leadership and organisation, meaning that the Association of Bridging Professionals is sure to have a place for years to come.