February 2020
Adam Tyler, Executive Chairman, FIBA
Working together, Brokers, Lenders and our Professional Partners
Last month I was expressing the idea that 2020 will be a good year for the sector and particularly for advisers. Having recently attended the Bank of England economic briefing, it was good to hear that stance confirmed and hear that an upturn in specialist property finance enquiries seen by our members and lender partners was being seen by the Bank. Their report did highlight a difficult end to 2019, but that a lot of sectors, including ours, had already seen that uptick in January’s figures.
We are now nearing the end of February and there has been nothing to make me change my mind in the interim, but news of the coronavirus and its spreading around the world does serve to illustrate how we can be surprised by events over which we have little or no control. Recent stock market losses demonstrate that greater volatility could be just around the corner. However, if you are optimistic like myself, our market has shown itself to be resilient to many different challenges over the years.
As the world’s scientists collaborate to come up with an effective treatment, in the same way it is vital that, rather than continue to work in isolation, we in the specialist finance industry need to commit to working together in order to further best practice, provide better education and deliver positive lending solutions for all parties in the specialist finance sector.
At FIBA, we have set ourselves a goal to facilitate mutual cooperation between all parties in the business including lenders, providers of support services, such as valuers and legal firms, and of course, intermediaries.
The present and future importance of this cooperation cannot be underestimated. We know that for many SME owners their first instinct is to approach their banks and yet in many cases they are turned down. More troubling is the evidence that many prospective borrowers don’t actually look elsewhere and whilst these numbers once were in excess of 50% of those declined, recent indicators I have obtained show that we are making some progress in this area.
To my mind there is not enough exposure about the role that brokers can play in helping SME owners find the funding they require, which means that this must be the focus of our campaign to raise awareness of professional advisers and make them more visible to SME owners.
However, we need to walk before we can run. Yes, the industry has been enjoying a period of growth but this could be multiplied again and again if we can become better coordinated with each part of the sector working more closely. We must aim to increase the visibility of advisers and brokers who have access to the choice of lending options which a single lender cannot not match.
So, what are the main drivers that need to be put in place?
Education must come at the top of the list. Yes, advisers are doing a great job on their own but we need to be able to point to a professional standard of competence that currently has no formal standing. For SMEs, there is nothing to tell them how professional the brokers are that they might come across at the moment. I am not casting aspersions on the many practitioners who have built up vast experience and have a strong existing client base, but a recognised qualification provides potential customers with confidence.
As a trade body, FIBA is also doing everything it can to build a consensus among lenders and the adviser community on other matters such as ways of resolving disputes and complaints. As we move forward, helping the industry to professionalise by tackling these kinds of issues will help to increase confidence in the sector by business customers.
That could then act as a precursor to a campaign educating business owners and the public about the value of using a qualified adviser in order to access the full range of lending options. It is clear that many have little knowledge of the multiple types of funding which are now available. As already mentioned, many, having been to their bank for their financing needs, tend not to look elsewhere, even if they are turned down.
Inevitably, technology can play a big part in the process, both in the way that information can be disseminated and also in helping brokers to become more efficient in their dealings with lenders as well as helping to improve client communication. Advances in Artificial Intelligence (AI) will begin to filter through to the specialist finance sector as lenders and advisers recognise its increasing value to speed up and shorten the whole mortgage process.
What is very clear, however, is that human interaction is still and will always be paramount. Advisers with the experience and background, but backed up by the best that technology can offer, will not only be the key to expanding business, but will headline a sector which can educate and inform potential customers to the benefit of every stakeholder.