NACFB amends 94% of lender agreements after review

The review was designed to address systemic imbalances in contractual terms that disproportionately burdened brokers and ensure fairer risk-sharing and clearer obligations across the commercial finance sector.

In 2023, the association introduced a contract review role to tackle growing concerns over opaque and inequitable clauses in broker-lender agreements.

Widespread issues were found, from ambiguous dispute resolution processes to overly punitive liability terms.

The NACFB has now rewritten or clarified almost all the agreements reviewed through collaborating with finance providers, including 98 patron lenders and 33 new entrants.

Explaining the origins of the initiative, Sarah Cunningham, head of compliance at the NACFB, said: “The NACFB observed how brokers were increasingly bearing risks beyond their control, stifling their ability to serve SMEs effectively.

“We dedicated specific resource to ensure agreements align with regulatory standards and mutual accountability.

“Our efforts have not been about diminishing broker responsibilities — more about creating greater fairness and clarity so all parties can thrive.”

Sarah went on to say the association had sought to reduce procedural friction by standardising notice clauses and refining monitoring requirements, and that lenders received tailored recommendations to amend terms, with some adopting the trade body’s template to pre-empt inequalities.

Jim Higginbotham, CEO at the NACFB, highlighted the broader impact: “Fair agreements are the foundation of a healthy commercial finance ecosystem.

“When brokers and lenders share risks transparently, SMEs gain faster access to capital, fuelling economic growth.

“We’re really proud of this work, it underscores our role as a unifying force — ensuring no party is unfairly disadvantaged.

“With the supreme court ruling on broker commission disclosure, and informed consent expected in the first half of the year, commercial lenders will likely look to make further addendums to their introducer agreement.

“The team will be on hand to review any changes through the appropriate lens to ensure fair and transparent expectations for brokers.”