Professionals in the specialist market have had to adjust after the collapses of Century Capital and Market Financial Solutions in particular, with the latter drawing worldwide attention and triggering a regulatory investigation.
This shift in sentiment was recorded in the Bridging & Development Lenders Association’s (BDLA’s) Bridging Market Survey, which revealed that the failures of the two bridging lenders had left the rest of the market facing greater checks around governance, transparency and reporting.
A shaken market
Matt Tristram, co-founder of Loans Warehouse, said it was understandable that the failures intensified audits across the specialist lending market, but noted that Market Financial Solutions was a “highly isolated incident driven by the actions of one business”, rather than a sector-wide issue.
Unfortunately, Tristram said, he had seen clients face the “biggest impact” of the fallouts in the form of having to “provide more information, answer more questions and wait longer for decisions, despite there being no change in their own circumstances”.
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“That’s the unintended consequence when confidence is shaken by the failings of a single lender,” he added.
Although the failures occurred in the bridging market, the impact was felt across the whole market, including second charge, Tristram said. During this time, Loans Warehouse saw “credit decisions taking longer, underwriters having less flexibility to find pragmatic solutions, and more questions being asked throughout the process”.
Figures from the Finance & Leasing Association (FLA) also pointed towards this, with May’s data showing the first monthly decline in second charge lending since April last year. This has since recovered, Tristram said, with June activity indicating a move beyond that period of caution.
Clayton Shipton, managing director of CLS Money, said despite the additional checks, he was “really pleased” that his firm managed to keep its average offer times to around 10-14 days.
He added: “That benefits clients through faster decisions, helps lenders by reducing unnecessary back and forth, and allows us to help more customers because we’re spending less time revisiting applications.”
Greater appreciation for packagers and specialist advisers
Brokers and clients are no more apprehensive about using specialist lenders, the packagers and specialist advisers noted, but had more gratitude for the services they received.
David Coleman, head of sales at Positive Lending, said he had seen “a much higher appreciation from brokers for the gatekeeping role we play” as it gave them peace of mind.
Coleman added: “Ultimately, everything that’s happened recently just reinforces what we’ve always believed: good due diligence isn’t about chasing rates and USPs. It’s about knowing the business behind the brand, so you can confidently deliver the right outcomes for brokers and their customers.”
Conversely, Coleman said this was not slowing down live transactions for his firm, which treated due diligence as a “continuous, ongoing relationship rather than a massive one-off hurdle”.
“In fact, by doing this homework properly upfront, we avoid the unexpected friction, sudden delays, or funding pullouts that usually disrupt a deal mid-process,” he added.
Shipton also said clients seemed to “value the reassurance that specialist lenders take the time to properly assess their circumstances rather than relying solely on an automated decision”.
The strength of existing practices
Shipton said specialist mortgage cases always needed more attention beyond the passing of a credit score or decision in principle (DIP) required for a mainstream mortgage.
He said every case was “far more individual”, which made experience and strong relationships with lenders important to “develop a genuine understanding of their appetite and how they assess different circumstances”.
Rather than a significant change to processes, CLS Money has focused on refining them, with Shipton adding that approaching specialist lenders in the same way as mainstream ones could make cases “inevitably take longer and create frustration for everyone involved”.
Shipton said giving a lender confidence and maintaining regular contact was key, adding: “Our experienced admin team now spends a lot of time anticipating what an underwriter is likely to ask for before the application is submitted. We often describe this internally as trying to achieve a ‘one-touch offer’, where the underwriter has everything they need during their first review of the case.”
Tristram said his firm had also not made any material changes to its operations.
“Strong governance, robust due diligence and only partnering with reputable lenders has always been part of our process, so there wasn’t a need to reinvent what we do,” Tristram said.
For Positive Lending, thorough due diligence is not a “new box-ticking exercise” or “knee-jerk reaction”, Coleman assured, saying the firm’s brokers had a “huge amount of trust” in its panel and clients relied on brokers to have done the “heavy lifting beforehand”.
Tristram agreed, adding: “The actions of one lender should not define an industry that, for the overwhelming majority of participants, continues to operate with strong governance and a genuine focus on delivering good customer outcomes.”
Inspecting new lender partners
When Positive Lending onboards a new lender, it strives to go “way past just looking at a glossy product sheet and a competitive rate to see the actual machinery behind the brand”, Coleman said, as the firm relies on its “long-standing baseline process that scrutinises their anti-money laundering compliance, complaints handling, arrears track record, and market longevity”.
Positive Lending also reviews a lender’s operational setup, such as its realistic application-to-completion times, legal panels and business development management support.
Still, Coleman said due diligence could not remain static, particularly as funding models evolved and regulatory pressures shifted.
Consequently, the firm has tightened its framework in two ways. Firstly, by going beyond checking whether a lender has capital to lend but “looking deeper into exactly where that cash is coming from”.
“If private funding is heavily involved, we want to understand the structure, the nature of the capital, and how resilient those arrangements really are if things get bumpy. It’s simply about ensuring long-term stability for everyone involved,” Coleman said.
Positive Lending also assesses a firm’s Consumer Duty approach: “A Fair Value Statement is fine on paper, but it only tells you what a lender intends to do”.
The firm now reviews how this is put into practice, what live management information (MI) a lender looks at, the practical support available to vulnerable customers and how feedback shapes decision-making.
“It gives us a view of their culture that a standard policy document just can’t replicate,” Coleman said.
Bringing attention to good practice
Tristram said the cautious reaction appeared to be a temporary one, rather than a “structural change to the market”, adding: “As those reviews conclude and confidence returns, we’re already seeing lenders become more comfortable, service levels improve and the flexibility that specialist lending is known for begin to return.”
He added that the specialist lending market remained “well-regulated, highly competitive and incredibly important” to the people it served.
Coleman said the discussion around lender due diligence had forced the wider market to “take a proper look at how they vet their partners”.
There are positives to be found from the heightened scrutiny, Coleman said, as it demonstrated that “good brokers have always been focused on presenting complete, well-evidenced cases and placing them with the right lender first time”.
“Greater consistency around governance simply reinforces those good practices and ultimately benefits everyone involved, particularly customers,” he added.
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