In today’s modern hyper-connected world, finance is a global business; firms from London can provide funding to businesses all over the world, and there is an enormous market for international credit. The United Kingdom’s economy is tremendously benefitted by the UK’s financial markets, as they constitute one of the largest sectors of the national economy, bringing in many millions of pounds every year – the continued health of the financial sector is integral to the economy’s (and thus the nation’s) stability. As such, it’s important to ensure that businesses which deal in credit products are trading both ethically and responsibly, in order to safeguard the future of their industry; without effective regulation, a few unscrupulous traders can do a tremendous amount of damage in a short space of time, wiping out consumer confidence and potentially harming the national economy as a result.
As part of the UK’s burgeoning financial sector, the short term lending industry plays a key part in the smooth conduct of business: short term lenders are those who supply loans with a comparatively short repayment date relative to their size. These can be supplied for any number of reasons, to borrowers of all sizes; for example, a common use of short term finance is to break a property chain by “bridging” the gap between one mortgage and the next with a short term loan. At the other end of the scale, short term finance is also commonly used within the construction industry, as it allows developers to begin preliminary work before securing long term funding (which is often dependant on the commencement of work anyway). Because of its flexibility, and the crucial role it plays in stimulating the economy, short term finance is one of the most valuable sectors of the financial industry, and as such requires careful management to maintain its stability.
What is the Association of Short Term Lenders?
The Association of Short Term Lenders exists as a central organisational body to regulate, protect and promote the short term finance sector. It was formed in 2008 by a group of 19 major short term finance lenders, to safeguard the future of the industry amidst the chaos of the credit crunch – the ASTL’s goals are to ensure that businesses within the short term lending sector are trustworthy and efficient, providing good value and clear benefits to customers. In addition to this, the ASTL also works to further the industry’s interests at Westminster and in the media, acting as a representative for short term lending in these critical areas. Finally, the ASTL works to keep its members informed of ongoing regulations, to promote compliance and standardisation in accordance with ongoing Financial Conduct Authority and Bank of England initiatives.
The Association of Short Term Lenders is an organisation for the furthering of the industry’s goals, and is not a broker in and of itself. As such, they do not offer any financial advice, and do not provide any form of funding; they do, however, display contact information for their members on their website, which makes the ASTL a good starting point for borrowers looking for a reliable and responsible short term finance solution.
Why was the Association of Short Term Lenders established?
The idea of short term finance first originated in the UK in the late 1960s, though it’s hard to pinpoint exactly where and when. It remained a relatively minor area of business for many years, due to tough restrictions imposed by the UK Government on lending criteria, but in the late 1990s became a widely used method of securing real estate properties. During the boom of the early 2000s many long term and short term finance businesses approved loans on a questionable basis, which contributed in part to the mid-2000s credit crunch. Although short term finance is a completely legitimate source of funding and, if used responsibly, opens up a wide suite of possibilities to businesses and individuals alike, it gained a poor reputation through repeated association with the financial crash. Since the problems were precipitated by mismanagement and opportunistic behaviour, a group of leading short term finance specialists stepped in to create the Association of Short Term Lenders, which is the only organisation in the UK specifically dedicated to property bridging and development lenders.
Who runs the Association of Short Term Lenders?
The ASTL is governed by a group of six executive members, who are elected democratically by the organisation’s membership. The executives nominate themselves for the roles, and as such are not subject to scrutiny from a higher authority; any ASTL member can apply to become a director. These directors change on a regular basis, with turnover occurring as old directors step down; however, Benson Hersch, the chief executive of the ASTL, remains in place as a guiding influence on the organisation, providing a valuable common thread of purpose from year to year, regardless of the makeup of the new executive committee. By establishing a fair, clear and honest process for election of the executive committee, the ASTL is able to reinforce the sense of identity which it seeks to instil within its membership; they are all eligible for election, and no boundaries are thrown up between the executive committee and the general membership.
How does the Association of Short Term Lenders work?
To restore and enhance the public’s trust in the short term finance industry, the ASTL works to establish a code of conduct which its members must abide by. This requires members to practise honesty and integrity at all times, ensuring that all costs are made clear to potential customers, and that their business is conducted in an open and ethical manner. By doing so, the ASTL is promoting a certain standard of customer service which is vital to maintaining public perception of the industry, and ensuring that it remains stable and profitable for its members. A code of conduct is not enough on its own, though; it’s necessary to provide both an incentive for members to abide by it, and a punishment if they should fail to comply.
The Association of Short Term Lenders is not able to exact fines or impose punishments on its members; those duties are carried out by the Financial Conduct Authority, which is responsible for enforcing regulation throughout the financial sector. The ASTL instead punishes its members through a disciplinary process which can result in suspension or expulsion. Complaints may be lodged against any trader by a member of the public, and will be dealt with accordingly – the case is either advanced or dismissed, according to its merit, and the ASTL may convene a committee to determine whether the member should be submitted to punishment. An appeals process does exist, which allows for fair and transparent decisions to be made.
Bringing the Industry Together
Since the Association of Short Term Lenders relies on exclusion as a punishment, it must also make sure that it provides sufficient benefits to its members that membership remains a worthwhile investment. To this end, the ASTL works to engender a feeling of community within its members, a goal which is outlined in its listed objective to “encourage professional and social interaction between its members”. This is more than an effort to promote good feeling; by bringing the short term lending industry together they are able to centralise organisation, maximising their ability to influence the direction of Government policy and increasing the industry’s resilience. To this end, the ASTL hosts an annual Association of Short Term Lenders Conference, where leading members of the industry gather to discuss ongoing developments, best practises and professional advice. These usually consist of a group of key speakers from various relevant area of interest; the 2016 conference featured addresses from the Financial Conduct Authority and The Times – the former outlining the FCA’s plans for upcoming regulation, and the latter discussing the political landscape and its implications in relation to the short term finance industry.
Throughout the year, the ASTL also organises a regular newsletter, in which it discusses and various initiatives which are likely to have an impact on the industry, and analyses the impact of different factors on the industry as a whole. Because the ASTL is able to use its position as the central organisation of the short term lending community to gain access to information and analysis from a wide variety of sources, the data it distributes to its members is highly valuable; it provides its members with access to information from primary sources. Without this access, short term lending professionals would be forced to place a greater reliance in third party sources for information and analysis, which is inherently a less stable platform. As such, the ASTL functions not only to bring the community closer together through a common thread of communication, it also uses this opportunity to further enhance the stability of the industry by providing clear, cogent analysis and up to date information to its members.
What happens at an Association of Short Term Lenders Conference?
The ASTL holds an annual conference that is always well-attended; the most recent conference in 2016 was sold out ahead of time, which clearly demonstrates the appeal which the event has to ASTL members. So what happens at the conference, and why is it so valuable for members to attend? The first advantage which members gain from attending the conference is the ability to gather information straight from the source; the ASTL always ensures that the conference features speakers from across the industry, with the 2016 Conference featuring representatives from the Financial Conduct Authority and real estate firm Savills, as well as addresses from key members of the ASTL itself. Given that the ASTL maintains a regular newsletter in circulation for its members, and that the event itself was widely covered in the media, it may seem that actually attending the event adds little value; however, this fails to appreciate the filter that is applied whenever information is condensed for a third party. A forty-five minute long address from a speaker may be effectively summarised by a reporter, but the information that makes it in to their article is by necessity reduced to the important points – there is much detail that must be left out, and this can be information of great value, depending on the member.
These conferences are a valuable way for various organisations and businesses to directly address the short term lending industry, and to voice their opinions about topics which concern them or their audience. For example, the FCA’s representative at the 2016 ASTL Conference used the opportunity to voice their concerns over the extent of unregulated bridging loans being approved, and the extent to which there is often misunderstanding on the part of brokers, borrowers and lenders alike (though they also pointed out how impressed they were with the quality of regulated loans). Similarly, Savills, the real estate firm, were able to address ASTL members regarding the state of the UK real estate market following the Brexit vote. This vital exchange of information demonstrates how ASTL members are able to benefit directly from attending the annual conferences, as it provides an opportunity to access information in full and in depth from a wide variety of relevant sources.
In addition to this, members who attend the ASTL conference are also given the opportunity to network with the rest of the attendees, with dedicated networking sessions scheduled during the day. This provides a valuable opportunity to build contacts within the short term finance industry, and also to reach out to members of associated industries. Because the state of the short term finance industry is of great interest to businesses in related fields, such as residential and commercial real estate, these networking sessions are a great time to build bridges with key members of relevant fields, contacts which can prove to be exceptionally valuable over time.
How does the Association of Short Term Lenders interact with the Government?
The financial sector is vitally important to the stability and welfare of the United Kingdom, and the UK Government has established several institutions whose responsibility it is to regulate the industry. The task of maintaining clear and actionable oversight of the financial sector belongs to the Bank of England, which has grown to become the nation’s financial safe keeper. The Bank of England has established several organisations for regulation, amongst which are the Financial Conduct Authority, the Prudential Regulation Authority and the Financial Policy Committee. The first of these, the FCA, is responsible for ensuring that the short term finance industry is trading in a sustainable and ethical manner, abiding by the rules and regulations set forth to govern it. Before 2014, this task lay in the hands of the Office of Fair Trading, which was the organisation responsible for general oversight; however, the OFT was replaced with the FCA, FPC and PRA to provide a greater degree of specialisation in regulatory oversight.
Governmental oversight has been established and enhanced in recent years in the wake of the global financial crisis; consumer confidence has been reduced in the credit industry, and the Government recognises that tighter restrictions are necessary. However, the regulatory bodies, though working towards the same goal as the Association of Short Term Lenders, stand to benefit from the detailed experience which the ASTL has in this sector; the FCA has the power to introduce sweeping reforms which have the potential to restrict legitimate trading if not properly enacted. The ASTL serves a very important function, then, by representing the short term finance industry to the FCA, as well as at the House of Commons, because it’s able to influence Government policy, alerting the FCA to regulations which could harm their members business interests.
Joining the Association of Short Term Lenders
The ASTL was established to guard the interests of the short term lending community, creating a common core of values which were shared by all of its members. To ensure that all of its members are adhering to the rules which are set out, the ASTL carries out examinations on all new members who apply, and although application itself is a simple process, the ASTL exhaustively checks the status and lending history of applicants to ensure that they are responsible and ethical traders with a proven track record.
The ASTL doesn’t restrict its membership purely to brokers, though, as it recognises that the industry benefits from the input of a wide range of other relevant sectors. Therefore, the ASTL has incorporated an Associate Membership scheme into its organisation, which allows businesses who supply services to lenders to register with the ASTL, benefitting both the associate member and the ASTL as a whole.
How does the Association of Short Term Lenders see the future?
The ASTL has made great strides since its creation in improving the public perception of the short term finance sector, and has proven itself to be a valuable asset to its members. The UK economy provides many opportunities for short term financial solutions, with a wide and varied market for ASTL members to work within; however, it’s vitally important that growth is conducted within a responsible framework of regulation, and the Association of Short Term Lenders will have a prominent role in ensuring that this is the case in years to come.
Official resources about the The ASTL and other regulatory bodies can be be found here:
- National Association of Commercial Finance Brokers (NACFB)
- Association of Bridging Professionals (AOBP)
- The Association Of Short Term Lenders (THEASTL)
- The Financial Conduct Authority (FCA)
- Bank of England Website
- Prudential Regulation Authority
- Financial Conduct Authority
- The Financial Policy Committee
- Financial Services Compensation Scheme
Other Unofficial Guides
Covering areas of UK financial regulation and aspects of Bridging Finance.
- Alpha Bridging
- Association of Bridging Professionals
- Central Bridging
- Commercial Banking
- National Association of Commercial Finance Brokers
- Reward Finanace Group
- Short Term Finance
- Taxi Finance
- The ASTL
- Watts Commercial
Research provided by: Bridging Directory.