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Q: Who regulates short-term loans?

This article is part of
Guide to short-term finance

The Office of Fair Trading. Most first-charge bridging loans will be regulated by the FSA no matter how short the term, whatever the purpose of the loan or how the borrower intends to repay.

There are relatively few specialist bridging lenders that are FSA regulated.

Alan Margolis, head of bridging at United Trust Bank, which is FSA regulated, said: “This reflects the fact that most bridging loans are secured against investment properties and so are unregulated.”

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Some bridging loans secured by second charges against borrowers’ residential properties will be regulated by the Consumer Credit Act.

Lenders and financial brokers need to have an appropriate Consumer Credit Licence from the OFT in order to respectively offer and deal with such loans.

Where a loan is regulated by the CCA, there will be CCA specified paperwork and a seven-day cooling off period.