NACFB's CEO speaks out over regulation

NACFB's CEO speaks out over regulation


Where regulation is not needed !

By Adam Tyler, CEO of the NACFB,


The NACFB have worked alongside the FSA and have always entered into dialogue over any issues regarding the possible introduction of regulation in the commercial market and the potential affects this could bring to the industry.


At the beginning of 2010 discussions took place regarding the possible regulation of the buy to let market, something that the NACFB saw as potentially damaging to an already fragile market. We campaigned hard against this regulation and responded with a full report to the Mortgage Market review and meetings with the FSA and  HM Treasury. Ultimately the appetite for introducing regulation in the buy to let market at that time waned, which the NACFB as an association representing all commercial brokers, welcomed. Essentially, we believe that it is a misguided belief that there could ever be a ‘one size fits all’ regulatory stance in the commercial market. Secondly, the introduction of red tape and bureaucracy could damage the market and in these times of gradual and slow recovery, this would clearly be absurd.


The NACFB was established in 1992 in response to the growing incidence of fraud. It was vital that the association could protect the reputation of the industry and the introduction of the NACFB Code of Practice sought to introduce best practice within the market. The Code of Practice has now become industry recognised since its inception in 1992 and the association has worked tirelessly to ensure that all our brokers abide by the Code of Practice and fully endorse professional standards.


As stated earlier, we very much intend on keeping an open dialogue with the FSA and wish to work closely with them to ensure that best practice is maintained within the industry. However, we firmly believe that the introduction of regulation in the commercial market is not the way forward. The commercial market operates quite differently from its residential counterpart and we believe that it would be extremely difficult to introduce regulation for the commercial market. It would undoubtedly make the brokers work far more difficult and strangle the smooth running of the market without delivering any tangible benefits. The NACFB Code of Practice works efficiently and the fact that it has become industry recognised is testament to its success. We believe that unprofessional brokerages need to be educated on best practice and brought in to line with professional standards – and as an association, we are fully equipped to carry this out.


Our commitment to maintaining professional standards in the commercial market was highlighted further when the NACFB established the Fraud Intelligence Committee in 2009. The FIC has uncovered fraudulent activity in the market and has reported the findings to the necessary authorities and will continue to do so. The FIC received a number of complaints regarding up front fee fraud and has certainly made it more difficult for the dishonest broker to operate. This is part of the association’s commitment to raising professional standards in the industry and we will ensure that the reputation of the professional and honest broker is not tarnished by the small minority who wish to make easy gains by dishonest activities.


The NACFB are adamant that self regulation of all of the commercial market is the most viable option as it allows for flexibility and has also been successful to date. The complexities of the commercial sector do not allow for straight forward regulation as in other already regulated markets. For example, an SME may purchase a commercial premises with a straightforward commercial loan for the property itself, but will then require leasing and asset finance for any equipment they may require. There could be a need for debtor finance if they have a number of outstanding invoices or they may even require trade finance. Of course if there are vehicles involved there are a number of different options of arranging funding for these whether it be commercial vehicles or for company cars. Once the complexities of commercial funding are investigated, it becomes clear that the average commercial deal can often incorporate more than one type of commercial funding and no two deals are really the same, therefore, it becomes more apparent that trying to regulate across a multi layered commercial deal would be daunting to say the least.


This applies to arranging finance for business purposes across the board, there is no formula based on income to take into account, whether it is a development deal or a trading business, funding is required for a short or longer term, there are many variables in all commercial transactions. So, this is where the professional Commercial Finance Broker, who has a good knowledge of all types of finance can put a deal together that is suitable not only for that individual customer, but it also satisfies all the lenders involved for the whole term of the loans involved.


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