The National Association of Commercial Finance Brokers (NACFB) is warning residential mortgage brokers to take great care when introducing their clients to a third party broker for commercial finance.
According to the NACFB chief executive, Adam Tyler, there has been an increase in the number of complaints from clients of residential mortgage advisers who have been put in touch with so-called ‘commercial brokers’ to source commercial mortgage deals.
“These ‘commercial brokers’ then promise much, charge heavily and deliver nothing. The mortgage adviser, who has introduced his clients in good faith, is left with demands for repayment of upfront fees and a damaged reputation.” Mr Tyler explained.
NACFB members operate under a Code of Practice and residential brokers need to make more stringent background checks before they hand over their clients’ details - and their clients’ money.
The NACFB’s advice to any residential broker who is looking to introduce a client to a commercial finance specialist is either to deal with an NACFB member or alternatively with a broker with which there is an existing, good relationship.
Mr Tyler continued: “Advance fee fraudsters are extremely plausible; they send emails to brokers offering terms unavailable anywhere else in the market. The problem is that after the client has advanced several thousand pounds for valuations or appraisals, no funding is forthcoming. There are cases on my desk where a residential mortgage has, in good faith, introduced several cases to one of these ‘brokers’ and lost their clients tens of thousands of pounds.”
“The Association founded the Fraud Intelligence Committee back at the beginning of the year for the purposes of investigating these cases and putting evidence in the hands of the proper authorities. At the current time, three cases have been forwarded to the police and Trading Standards for further action and many more are under investigation.”