Adam Tyler

FIBA to publish default rates of lenders

The Financial Intermediary & Broker Association (FIBA) has decided to start publishing lenders' penalty or extension rates in its online lender directory.

Adam Tyler, executive chairman at FIBA (pictured above), said the move followed concerns about the transparency of default rates in the industry, which was raised by members and lender partners.  

“We feel that this openness and transparency will be another step forward in the professionalism of the industry,” said Adam.

Mark Posniak, managing director at Octane Capital, initiated the conversation about default interest last week via LinkedIn

So far, his post has resulted in 68 comments and 177 reactions from people in the sector. 

Mark asserted that excessive default interest rates were damaging to the industry and warned brokers to triple-check the small print when selecting a lender.

“By charging ridiculously high default interest rates and, in some cases, concealing them as standard rates of interest, the industry is doing itself no favours,” he claimed.

“Lenders should work with borrowers who are struggling, not least because that way those same borrowers are more likely to get back on track.”

Mark added that high default interest rates were bad for the industry’s brand and made “absolutely no business sense”.

“We’re urging brokers to be extra cautious and triple-check the small print, especially given the slow-moving market, which is putting clients under greater pressure.”   

Octane charges 2–3% more per annum (not per month) when its own clients default on their payments, with the rate chargeable depending on the event of default.

Adam added that the collection of details from some of its lender members regarding the way in which they state and calculate all their interest is already underway.

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