In recent months, Capital Bridging Finance Limited (CBFL) has been able to take advantage of short term funding opportunities generated as a consequence of the current review of IRHPs sales by the banks. 

Under FCA scrutiny, the sales process involving this funding product since 2001 is being reviewed to ensure their methods of sale were in line with the agreed approach. 

The review includes establishing a robust redress model and it is here that short term funders have an opportunity to work with their distribution partners to focus on those businesses that have become victims of circumstance, as the review highlights some of the difficulties businesses have got themselves into because of the banks’ failings.

Though it is known that as many as 20,000 clients are considered eligible for the review it is hard to determine how many could be target clients for the likes of CBFL. What we are encouraged by is that through our distribution we are hearing that many are portfolio property investors. We are working with the brokers to ensure that the exits are viable and agreed as it is generally the case that the portfolio will have to be restructured amongst several longer term lenders.  

There are some excellent opportunities for commercial refurbishment once, the sometimes drawn out, (not surprising) process has been concluded and the potential client has not accepted an alternative product offered as redress by the particular bank.

Lenders should see this route to market, whilst challenging, as another way of establishing our prudent and ethical credentials with quality new clients who have in the past put their trust in the established banks. We are being forever warned that this time of plenty for the short term funder will be no longer when the big boys return. I for one am in no way deterred by that gloomy forecast.

What we have with this so called debt forgiveness opportunity is just that; an opportunity to further grow our distribution and reinforce our proposition so that when the big boys return (and they will), we have every confidence in our own proposition and our client and broker relationship to take them on in a way we were not able to in the past.

A recent case for CBFL has highlighted the value of this new business channel. John Singh of Express Financial Services introduced a case where the review had shown the client had been charged excessive rates on his IRHP and that they had also overestimated the property values. The case involved a client who had a debt with a leading High Street Bank of £2 million redressed under the review to £500,000. The bank agreed he had suffered as a result of the IRHP sale and its miscalculation of the client’s portfolio.

John Singh commented: “Working with a short term funder like CBFL I have had the opportunity to restructure my client’s needs, his portfolio is no longer in the one basket and with the support of my longer term funding partners giving my client the exit, CBFL demanded the problems my client faced ahead of the successful outcome of the review process have all but been resolved.  

“I would say, however, this type of restructuring is not for the amateur. All stakeholders need to have a thorough knowledge of the market.“