Brokers offering bridging despite a lack of sector knowledge
Research by Brightstar Financial and West One has found that 83% of brokers offer bridging finance to their clients, even though only 67% claim to have at least a good knowledge of the sector.
The survey, which was conducted amongst more than 500 brokers, found that more than eight in 10 brokers offer bridging finance to their clients, even though some have limited knowledge about the sector. According to research, 27% of brokers claim to have 'excellent' knowledge and 40% claim to have 'good' knowledge of bridging, while 23% say their knowledge is 'average' and say 10% admit to their knowledge being 'poor'.
When asked whether they currently refer a client to a specialist distributor when their client's bridging needs fall outside of their knowledge area, only 45% of brokers said they did, with 55% saying they didn't.
The research found that purchasing a property at auction is the most popular reason for brokers recommending bridging finance, with 85% of brokers considering bridging in this situation. Three quarters (75%) said they would recommend bridging for property chain break and 73% said they would recommend bridging for property conversion. Just over half (54%) of brokers said they would consider bridging as a short-term cash flow solution for their clients.
Michelle Westley, Head of Marketing at Brightstar Financial, said: "It's great that so many brokers are offering bridging to their clients, as it's a flexible product that can prove the right solution for many property investors and homeowners. However, it's important that brokers have the right level of knowledge about the sector to ensure their clients are achieving the best outcomes for their circumstances and, from this research, it looks like many brokers are offering bridging without even claiming to have a good knowledge of the sector, let alone an excellent knowledge. What's worse, is that more than half of the brokers admit to not engaging with a specialist distributor when their client's requirements fall outside of their area of knowledge.
"We can only conclude that there are many brokers out there who are offering bridging without the right expertise or partnerships in place to protect their client from poor outcomes. This is clearly bad for consumers, bad for the reputation of the sector and, ultimately, bad for those brokers. Dabbling in any market is dangerous without an in-depth working knowledge of the sector and we would always recommend that brokers who do want to offer bridging to their clients, partner with a specialist that is fully immersed in the market."
Aisling Birch, Partner Marketing Manager at West One, said: "This research has shone an interesting light on the bridging sector and how brokers are engaging with it. I'm delighted that so many are considering bridging for their clients but would echo Michelle's views in that sector expertise is paramount for good customer outcomes. With this in mind, brokers should make the most of the resources available to them to stay on top of the key considerations and opportunities for their clients. This includes making use of educational material, such as webinars and guides, as well as engaging with lender BDMs to help them with specific questions."