More about permission – company access to finance must not be impaired
The Financial Conduct Authority wishes to protect the consumer and the smaller business owner who is either a sole trader or in a small partnership. In introducing regulation governing the activities of introducers of business to lenders it has ruled that those dealing in this market require its permission. This involves a vastly more bureaucratic process than obtaining the old consumer credit licence. To apply, you have to be active in the consumer finance market.
The FCA has also ruled that those only introducing business to limited companies need no permission: more, they cannot get it.
An EGM of the NACFB saw a suggestion to make full membership dependent upon holding permission. The association was formed in 1992 by a group of, largely, corporate finance, intermediaries but the association now embraces hundreds of consumer market associated, permission holding, car finance and buy-to-let brokers. Corporate finance brokers, it was muted, could now be offered a much reduced status.
They are indignant, especially as it is rumoured that compliance officers in some lenders are already suggesting that those bringing them company business hold the permission they cannot obtain.
Business Money is throwing its pages open to air the views of interested parties. We must have objectivity and sustainable arguments.
I have heard it said that the corporate-only brokers in the NACFB are mostly old, which is ageist. Many of them hold professional banking qualifications, something far in excess of those required to obtain permission. We could see the bizarre situation where certain banks refuse to acknowledge the substance of their own professional standards!
Another argument is that corporate brokers represent only 4% of the membership but they sit at the top of the NACFB, skill-sets pyramid representing quality if not quantity.
As for the one about the accountant intervening on a company proposition, at the last minute, to insist that the loan be taken in the personal name of a borrower for tax purposes. It falls into the full solar eclipse, coinciding with a blue moon, on a Shrove Tuesday, in a leap year category. I never met that one in 28 years at the sharp end dealing with just about every category of complex company borrowing imaginable.
And processes for taking guarantees in support of limited company facilities are easily made bombproof. Independent legal advice is essential, especially if the family home is, not unreasonably, on the line too supporting the company that provides the family’s prosperity.
Correctly taken guarantees are very hard to challenge which is more than can be said for arguments, so far, advanced to justify an NACFB, or lender, permission only, closed shop.
Whilst not an NACFB member I must declare an interest.
I still introduce the odd deal. Over the years they have ranged from £15m to £600,000. I do not have, and will not obtain, permission. I, like the NACFB’s corporate finance members, have far too much to offer the world of business and commercial finance to be shouldered aside.
And I have never been able to fathom the reasoning of those with a mystical faith in the market appeal of being fully regulated. Is that the only, dubious, cosmetic benefit they can muster to sell their services to a pragmatic company sector?
We undertake to run every, well-constructed, contribution that makes either case. At stake is the ease of access to competent advice and finance for the UK’s finance hungry companies. The FCA got it right and the intent must not be frustrated by gold-plated, compliance conditions.
In 2015, Business Money will indicate in its comprehensive, commercial lender lists if any require introducers of company business to hold this unnecessary permission.
It will obviously, also, indicate those that do not. One major player has already volunteered to be included here and we have not yet enquired of the others.
Permission not required – commercial lending to limited companies