NACFB brokers better insurance cover for peer-to-peer loans
Following collaborative work between the National Association of Commercial Finance Brokers, Towergate Insurance and Funding Circle, NACFB members can now arrange an unrestricted number of commercial loans with peer-to-peer lenders without jeopardising their insurance cover.
Under the terms of the trade body’s membership, NACFB brokers must have professional indemnity insurance which covers them against claims of mis-selling from clients.
Until this month, however, insurance companies had restricted the amount of business commercial finance brokers could place with peer-to-peer lenders for their cover to stay valid.
Paul Goodman, NACFB chairman, said:
“Peer-to-peer lenders came onto the market at the same time as payday lenders, and some insurers had confused the two. There was a perception that peer-to-peer lenders placed onerous terms and conditions on how the loans should be repaid, and that this would make commercial finance brokers vulnerable to charges of mis-selling.
“This left commercial finance brokers having to choose between growing with this booming part of the market and the security of legal and financial backing if they were to face legal action from a client.
“Following a milestone meeting with the NACFB, broker Towergate Insurance which arranges the NACFB’s exclusive members’ cover, leading Lloyd’s of London insurer Beazley and Funding Circle, a leading peer-to-peer lender, NACFB’s cover now contains no restrictions.
“This makes NACFB’s exclusive cover the only policy in the market specifically designed for commercial finance brokers which covers an unlimited amount of brokered loans with peer-to-peer lenders.
“Peer-to-peer lending is booming and it’s fantastic that our members can now use it as much as they like, safe in the knowledge that they enjoy protection arranged by NACFB Insurance Services.”
Crucial support comes from long-term NACFB Patrons Funding Circle.
Neil Mullane, sales performance and commercial manager at Funding Circle UK, said:
“In the UK, direct lending through Funding Circle has enabled nearly 60,000 investors to support 22,000 British small businesses with more than £2bn in finance.”
“We worked closely with Towergate Insurance to demonstrate that we are able to provide businesses and finance brokers with greater choice beyond the traditional lenders; with a faster, flexible and personalised service.”