Adam Tyler, is CEO of the NACFB.
The road outside our office has very recently been closed off at the end with a couple of concrete bollards. This is great news for NACFB staff, who can cross the road without looking up from their iPhones without being run over except by cyclists, but it’s bad news for the handful of drivers who trust their Sat Navs implicitly. As they suddenly notice the concrete, and brake and start to execute protracted and humiliating U-turns, they embody the experience that we do not want our brokers to go through; the experience of having wasted time.
This past month I have taken a handful of phone calls from brokers asking how far the FCA expects regulated brokers to go in “showing their working”, and what they are really asking is “can you make sure I don’t waste my time doing anything I don’t need to?”
That is not just a rhetorical question. If you were to take a little time out of the day job playing Mystery Shopper, you could build up a comparative snapshot of which lenders offer the best terms on each of the many varieties of invoice financing; recourse, non-recourse, confidential. It’s unrealistic to expect a broker to consider every single option to that degree, because if nothing else there are nearly fifty invoice discount funders working with the NACFB, and that number is only going to increase.
Then you have to compare service/administration charges, discount charge expressed as a margin over base rate, debtor protection set as a percentage of turnover or fixed fee, and, where applicable, a renewal fee, and plenty else to consider besides.
The phrase “whole of market” is almost invariably misused now that the market encompasses so many different lenders. A broker who uses 40 funders on a regular basis has a good claim to calling himself “whole of market” but there are 105 NACFB patrons with whom he doesn’t make contact – so what does the “whole” mean in this context? That one is a rhetorical question, so don’t all write in at once.
If you only deal with six or 15 or 25 lenders, just be up front about it. You’re not expected to have contact with every lender on the market…but showing that you are taking steps to update your whole-of-market knowledge is a part of best practice.
Our brokers are not looking to cut corners. That would be the wrong term. But they are seeking to take up no more of their time than is necessary. Everyone has the right to arrive at a shortlist by reasonable steps of elimination. So long as they a) ensure a client gets a genuinely competitive deal, and b) demonstrate to the FCA that they have done so, then there needn’t be an airport novel-sized stack of paperwork for each lead.
“I’m hoping for the application of a little common sense,” one long-established NACFB member said to me, and sometimes, a little is all we can hope for. Our new Training and Education resource has been built with the help of Competent Adviser and is aimed at keeping brokers fully aware of what they are expected to do and, by extension, what they don’t have to do.
We rolled it out at the Commercial Finance Expo on June 15, amongst a lot of other announcements which felt a little like running seven marathons in seven days – you’d be healthier if you spread them out, but it wouldn’t be so newsworthy. Ricardo Abad Martinez holds the record for running 607 marathons on consecutive days, but he should try running an Expo; one per year is enough for us.
The NACFB meets the FCA regularly. Fortunately, the FCA understands this is a crowded market and that it is reasonable to take a few large steps to narrow down the field of options; geographical location might be one, client preference could be another, and isolating some specifics of the case before heading down every avenue is also acceptable. And sometimes our members will call us looking for guidance, especially in the trickiest cases where they are bracing themselves for a number of rejections. Who goes for a joyride in a cul-de-sac?