Dangers of unregulated lenders pushing buy-to-let boundaries raised at NACFB

Leaders from One Savings Bank and Paragon Bank highlighted concerns with how some non-bank lenders were taking advantage of operating outside the Prudential Regulation Authority (PRA) rules.

Those lenders who are not regulated by the PRA are not compelled to follow the changes introduced on portfolio lending last year, however some have chosen to do so.

Speaking at the National Association of Commercial Finance Brokers (NACFB) Commercial Finance Expo 2018, Paragon Bank director John Heron (pictured) feared taking advantage of this regulatory divergence could have significant consequences.

“There are some really significant changes to the market but it’s not without its dangers,” he said.

“We are seeing non-bank lenders starting to see a regulatory arbitrage available which some will take advantage of, and this may not work in the best interest of landlords or indeed the wider finance community.”

Pushing of boundaries

Heron was supported by One Savings Bank sales director Adrian Moloney, who also raised concerns about this approach.

“I do agree with some of the points on non-bank lenders,” he said.

“We saw a lender launch its portfolio proposition a few weeks ago and it was only going to stress limited company buy to lets in the background and that’s the part which is probably going to be least effected.

“So I do see some pushing of boundaries there,” he added.