Property Lending Sector: FCA Regulatory Review
The FCA has recently focused its gaze on property lending firms in the retail and wholesale markets to better understand their lending framework, as well as the structure around these frameworks. The focus has been extended to both the P2P lending and property crowdfunding markets specifically, with the industries having recently seen a number of recent developments from both a policy and firm activities standpoint.
The FCA’s review is largely focused on:
- Loan lifecycle
- Management and collections
- Governance and oversight framework
- Disclosures to relevant stakeholders
For some property lending firms, this has amounted to the FCA scheduling on-site visits to better understand their business practices around this segment, as well as discuss any issues with their historic or existing loan books. These reviews have been rolled out to the whole of the market, not just those who may have non-performing loans in their portfolios.
What do firms need to do?
Property lending firms should ensure that they have in place a robust lending framework as part of their business operations, considering not only what appropriate underwriting and debt management looks like, but also what lending oversight and management frameworks exist.
The FCA are keen to recognise and note that property lending firms operating in this space have an obligation to manage these facilities appropriately for and on behalf of those financing them, ensuring that they understand and are aware of the relevant procedures exercised by firms, as well as the specifics of opportunities from both the outset and on an ongoing basis.
What are the consequences?
If property lending firms fail to consider their lending practices in a multi-faceted approach, it is likely that the firm will not only begin to see crystalised losses on their books but also reap some of the serve regulatory consequences which accompanies this.
- Cancellation of permissions
- Withdrawal of authorisation
- A winding-up order
- Fines/assets seized
- Entering the firm’s premises, with a warrant
- Civil proceedings
How can Thistle help you?
We can provide support in several ways including:
- Provide initial advice and guidance on some of the key lending framework points currently under consideration
- Support firms who may be the subject of a current FCA visit with a number of different preparation techniques, including mock interviews
- Undertake audit and health check assessments considering a firm’s current policies, procedures and regulatory framework
Thistle currently works with a material number of P2P lenders and property crowdfunders in the UK market and can support such firms in a number of other ways.