Until recently, exit planning in property finance was often treated as a commercial issue. If a borrower failed to repay on time, the consequences were theirs alone. But in 2025, that position is no longer defensible. The Financial Conduct Authority (FCA) has made clear — through the introduction of the Consumer Duty and ongoing supervision of lender practices — that repayment strategies are not just about commercial outcomes. They sit at the heart of responsible lending.
In earlier blogs, such as Why Every Bridging Loan Needs a Clear Exit Strategy and Why Proactive Exit Planning Improves Loan Book Performance, we explored the commercial rationale for robust exits. The FCA goes further: it expects lenders to test whether repayment strategies are realistic, evidenced, and aligned with good consumer outcomes.
The FCA’s mandate is to protect consumers and ensure financial markets function fairly. That includes making sure borrowers are not placed into products that are unsuitable, unaffordable, or likely to lead to harm.
A bridging loan that cannot be repaid on maturity is a clear example of potential consumer harm. Borrowers may face default interest, legal enforcement, or repossession. The FCA therefore expects lenders to demonstrate that loans are advanced only where repayment plans are credible.
This expectation sits firmly within the Consumer Duty framework, which came into effect in July 2023. The Duty requires firms to deliver “good outcomes” for retail clients, covering products and services, price and value, consumer understanding, and support. In property finance, a good outcome means a facility that can realistically be repaid.
For lenders, this changes the nature of exit planning. It is no longer just prudent risk management — it is a compliance obligation.
Lenders are now expected to:
This does not mean every loan must be risk-free. Property markets fluctuate, and some borrowers will always encounter difficulties. But lenders must be able to evidence that they considered these risks upfront and structured facilities responsibly.
Consider a situation where a lender advances multiple facilities based purely on optimistic sales assumptions, without testing whether sales completions would realistically occur before loan maturity. If the housing market slows and sales stall, borrowers may default in large numbers.
In such a scenario, the FCA would not simply accept “market conditions” as the explanation. It would ask whether the lender had properly stress-tested the exits at the outset, considered alternative repayment routes, and ensured that borrowers understood the risks.
This example illustrates the FCA’s perspective: lenders cannot outsource exit risk to the borrower. They must show they anticipated potential problems and structured facilities in ways that minimised consumer harm.
A complicating factor is the line between regulated and unregulated property finance. Development and bridging loans are often classed as commercial, and therefore outside the FCA’s direct mortgage regulation. But when borrowers are individuals — including landlords, small-scale investors, or overseas buyers — the FCA views them as consumers entitled to protection.
As we highlighted in The Cost of a Failed Exit, the consequences of missed repayments can devastate personal finances. Under the Consumer Duty, lenders are expected to apply the same principles of fairness and good outcomes regardless of technical product classification. That means stress-testing exits, assessing affordability, and providing clear communication about risks.
Based on published FCA guidance and its supervisory focus, lenders should be prepared to demonstrate:
For lenders, this means building compliance into the heart of underwriting. A loan that looks profitable but carries an unrealistic exit is no longer acceptable.
The consequences of ignoring FCA expectations go beyond fines. The greatest risk is reputational. In a market where funders, investors, and counterparties increasingly assess lenders by their governance standards, any perception of weak compliance can damage credibility.
By contrast, lenders who embrace proactive exit planning can demonstrate both regulatory responsibility and commercial strength. A loan book that consistently repays on time not only satisfies investors but also proves to the FCA that Consumer Duty outcomes are being met.
In this sense, compliance and performance are aligned: what makes sense for regulation also makes sense for loan book health.
At Willow Private Finance, we work closely with lenders to design and evidence credible exits. Our role is to test assumptions, provide realistic structuring, and ensure that facilities align with both commercial viability and regulatory expectations.
For lenders, this means deals that repay on time, borrowers who achieve good outcomes, and loan books that satisfy both investors and the FCA.
Frequently Asked Questions
Why is the FCA now focusing on exit planning in property finance?
Because under the Consumer Duty and evolving supervisory scrutiny, repayment strategies are no longer merely commercial risks but obligations: lenders must ensure exit plans are credible and avoid consumer harm.
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What does the FCA expect lenders to do when underwriting exits?
They should stress-test exit strategies under conservative assumptions, scrutinise refinance capability (not just optimistic projections), and assess borrower vulnerability.
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Does the product classification (regulated vs commercial) matter for FCA oversight?
Yes — while some bridging or development loans are classed as “commercial,” if the borrower is an individual, the FCA treats them as a consumer and expects exit fairness and risk testing as though regulated.
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What ongoing obligations do lenders have after the loan is made?
They should monitor exit assumptions over time, adapt if market conditions change, and ensure fair treatment in enforcement or extension decisions.
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What are the reputational and compliance risks if lenders fail to plan exits properly?
Beyond potential fines, poor exit structuring can damage reputation, undermine investor confidence, and be seen by the FCA as failure to deliver “good outcomes” under Consumer Duty.
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How does Willow support lenders in aligning with FCA exit standards?
By stress-testing assumptions, designing evidence-based structuring, and ensuring facilities are both commercially viable and compliant with regulatory exit expectations.
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About the Author — Wesley Ranger
Wesley Ranger is the Founder and Director of Willow Private Finance. With more than 20 years of experience advising borrowers and lenders, he specialises in exit planning strategies that not only ensure repayment but also meet the FCA’s expectations for responsible lending under the Consumer Duty.
Important Notice
This article is for information purposes only and does not constitute financial advice. Property finance carries risk, including the risk of default or repossession if loans are not repaid. Exit strategies should be assessed carefully and tailored to individual circumstances. Always seek professional advice before entering into any finance agreement. Willow Private Finance is directly authorised and regulated by the Financial Conduct Authority (FRN: 588422).
