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Newspage RawSource: Rohit Kohli, Senior Mortgage Adviser - Residential & Commercial

Broker alert: The lenders the FCA can’t see

ended 16. October 2026

Who is looking after borrowers when the lender sits outside the rules?

A broker has come across a case that brings that question into sharp focus.

After a difficult period, a client took a short-term bridging loan that was advertised on social media. The loan is secured on the client’s home, and the lender is not FCA authorised. The interest and fees were rolled up into the loan, so the balance has grown substantially over time and the client now fears losing their home.

The broker knew straight away that the case couldn’t be placed anywhere, but spent time finding out what support was available for the client.

The paperwork itself is contradictory and inconsistent. It also contains little to show that the client received independent legal advice. The client says there was no trading business at the time, and that the lender knew they were vulnerable. Whether any of that matters legally is a question for a solicitor. But when the broker looked for somewhere to take it, the answer was the same everywhere. The Financial Ombudsman can’t take complaints about firms that aren’t authorised, and the FCA doesn’t handle individual complaints. What’s left is a complaint through a trade body, which only works if the lender happens to be a member, and legal action at the client’s own cost.

The regulator has been very visible in going after unauthorised promotions on social media. Yet here, a loan secured on someone’s home was advertised in the same way, and for the person at the end of it there was nowhere to go.

Should every loan secured on someone’s home be covered by the regulator, or is it right that some sit outside it?

We’d like to hear from you

  • Have you seen similar cases, where people have borrowed against their home thinking there was a level of protection for them, and then found out there wasn’t?
  • Should a “business purpose” label be enough to take a loan on someone’s home outside regulation?
  • When the lender isn’t authorised, who should a borrower be able to turn to?

4 responses from the Newspage community

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Rohit KohliVerified
Director at Senior Mortgage Adviser - Residential & Commercial
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We have had a client in exactly this position. From what he told us, the people he contacted through the social media advert coached him on what to say to secure the loan, or at least what not to say. They also seemed to arrange the legal side, including the independent legal advice. It feels like he was taken advantage of at a point when he was quite vulnerable.

The Ombudsman can’t help as the lender isn’t regulated, and the FCA won’t take individual cases. The only route is legal, which is slow, costly and exhausting for someone vulnerable, and he’s at a very low point.

Should a “business purpose” label be enough? No. Once borrowing is secured on someone’s home, there need to be more checks and balances. That doesn’t mean every loan must be regulated, but there should be a clear break between the lender and the legal entities involved. There should also be a route into the Ombudsman for loans secured on a home. People assume there’s a safety net, and here there wasn’t one.
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Nouran MoustafaVerified
Practice Principal & IFA at Roxton Wealth
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I struggle with a system where someone can put their home at risk and only discover after things go wrong that they do not have access to the Ombudsman.

Calling something a “business loan” should not magically make the human being, or the home securing it, disappear.

There are legitimate reasons why some commercial lending sits outside consumer regulation. But the borrower should understand exactly what protection they are giving up before signing, particularly where their main residence is at stake.

And if a lender barely cares how the debt will be repaid because the property is valuable enough, that should terrify the borrower, not reassure them.

If losing your home is a possible outcome, discovering afterwards that nobody regulates the relationship is far too late.
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Tony SanchezVerified
Founder at Bridging Loan Directory
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When someone’s home is at risk, “you signed the paperwork” is not a good enough answer to concerns about how a loan was sold.

At Bridging Loan Directory, we encourage borrowers to look beyond the headline rate. Before choosing a lender, establish who is providing the loan, whether that particular loan is regulated, what complaint route exists and the total repayment cost if the planned sale or refinance is delayed. Check any claimed FCA permissions against the Register and seek independent advice.

But those checks cannot replace lender responsibility. A “business purpose” label alone does not establish that a loan is outside regulation. This case needs specialist legal scrutiny before anyone concludes that it falls beyond the rules.

Legitimate unregulated lending has a role in property finance. Where someone’s home secures it, I believe clear explanations, properly evidenced lending decisions and an accessible route to challenge unfair treatment should be basic safeguards.
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Harvey DhillonVerified
Founder & CEO at Zmartly
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No, a signed statement that a loan is for business shouldn't be enough when someone's home is the security. Where that label works, the lender can take the borrower's word for it unless the lender, or someone acting for it, knows or has reasonable cause to suspect otherwise. Nothing in that test makes the lender ask for proof a business exists. Yet when a home loan is regulated, a lender can't use the lighter rules for loans that are only for business without reviewing a business plan with credible evidence. That's back to front. An established business leaves a paper trail, like a tax return with trading income, accounts or Companies House filings, and one that's only planned should at least have a credible plan. Who borrowers should turn to is a question for the regulator and solicitors, not an accountant. But if a business is real enough to put a home at risk for, it's real enough to show on paper.