Brokers offering bridging finance without sector knowledge, study finds

Brokers are are offering bridging finance options to their clients despite a lack of knowledge in the sector, new research by Brightstar Financial and West One has indicated.

The pair found that 83% of brokers offer bridging finance to their clients, even though just 67% claim to have at least a good knowledge of the sector.

A study, conducted among more than 500 brokers, found that 27% of brokers claim to have “excellent” knowledge and 40% claim to have “good” knowledge of bridging, while 23% said their knowledge is “average” and 10% admitted 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.

Furthermore, 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, 73% said they would recommend bridging for property conversion, while over half (54%) of brokers said they would consider bridging as a short-term cash flow solution for their clients.

“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,” said Brightstar Financial head of marketing, Michelle Westley.

“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 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 clients from poor outcomes.”

Partner marketing manager at West One, Aisling Birch, added: “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.”

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