Let's get ahead of the curve
22 Nov 2019
Following on from last month’s article, I want to take a look at another area of particular interest, where, by acting together, we would help the sector prepare for the likely increase in regulatory oversight ahead of the actual event.
The sector would definitely benefit from an impartial complaint reporting process. While the industry has no formal central point to report dubious practice in any aspect of the industry, the joint industry forums that we have chaired at FIBA have already been effective in providing a place for certain aspects of our industry to be aired amongst all participants, brokers, lenders, solicitors and valuers. The current interest in default rate charges is one particular area to highlight.
In the absence of a dedicated facility in the bridging channel, at FIBA we provide a resource to respond to complaints from members who have issues with the way either a broker and lender or importantly their customers have been treated.
While the sector has significantly improved its standing in the eyes of the whole lending market in many ways, complaints from advisers and indeed customers about difficult experiences, whilst we have a Code of Professional Ethics and Standards, a procedure should be put in place where issues can be recognised. The likely increase in regulatory oversight may be on its way in the future, but in the meantime FIBA is more than capable of providing such an independent and impartial mechanism to make it happen.
We have already proven that we are in the best position to provide that rallying point, having campaigned hard since inception about the need for higher standards and greater transparency from all parties involved in a specialist property transaction.
The value of expanding this initiative would provide further evidence that the bridging market has the ability to prepare for the future and, in so doing so, would also increase transparency and confidence in the bridging market as a whole. It would be a very positive demonstration to those who could eventually influence the way in which we have to conduct our industry.
The challenge to commercial finance in anticipation of the change to the Consumer Credit Act in April 2014, is still a very vivid memory and a hard battle was fought to align ourselves closer to a regulated environment. However, regulation is creeping forward with the latest change just a month away in the form of the Senior Managers & Certification Regime, where as part of the wider SimplyBiz Group, we are providing significant support to our members in making the transition.
Whilst it might not be what many specialist property finance brokers would seek, but nearly all commercial advisers have full credit broking permissions, which has been a good thing for the industry. It would be seen positively by customers, both private and corporate, to see that the professionalism of the industry is being monitored and its specialist advisers are formally qualified to provide advice.
I have been involved on a number of occasions in discussions and the proposed implementation of an industry standard, not only for the bridging market, but for all aspects of commercial lending. The discussions for modular based industry training would perhaps have more support and relevant education bodies in our industry already have this capability.
Discussions have also taken place with specialist property finance industry colleagues on the topic of support for an independent source to consider the issues from our members and their customers. This also included the wider topic of setting out a framework on which a regulator might model future compliance requirements. The overall response has been largely supportive. We are heading in the right direction, but it is up to all of us to bring about the changes the sector needs to be best prepared for the possibility of a more regulated environment.
So much potential
It takes a lot to surprise me, but I admit to being taken aback that almost half of small businesses in the UK have never accessed business finance.
According to research by one of the latest firms to join FIBA’s provider panel, insurance specialist Purbeck Insurance Services, 29 per cent of business owners have turned to their overdraft facility to fund their business and 16 per cent of small business owners have taken an unsecured business loan to free up cash for their company, while 10.4 per cent used a commercial mortgage.
Only nine per cent said they had used asset finance, while 7.6 per cent used invoice financing and 5.2 per cent said that they had used another type of loan secured by debenture or charge.
With competition amongst the many lenders to business at its highest point since the credit crunch, interest rates are getting lower, with specialist lenders offering unsecured funding as well.
Clearly, there is plenty of demand for finance and it is up to us, our members and other advisers in the sector to highlight our presence to SME owners, so that they are aware of the differing ways in which they can access the right type of funding.
Adam Tyler, Executive Chairman, FIBA