UK commercial finance group LDF has been approved by UK regulator the Financial Conduct Authority (FCA) to help UK SME finance brokers manage regulatory responsibilities under the FCA consumer finance regime.
LDF has been approved as an FCA-regulated ‘Principal’ for consumer finance and can provide a regulatory infrastructure and license for SME finance brokerages operating under its umbrella as ‘appointed representatives’ (ARs).
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The model provides an alternative to commercial finance brokers currently operating with ‘interim permission’ who have little over a year to either secure FCA authorisation or leave the regulated market entirely, said LDF.
Becoming an appointed representative means brokers can choose to be regulated by the FCA under a Principal’s regulatory umbrella, where the principal takes on responsibility for the broker’s FCA compliance and reporting requirements.
Callum Stevenson, head of strategic business development at LDF, said: "SME finance brokers are crucial to the funding of the UK’s smaller businesses, and we want to do as much as we can to help the industry through a time of enormous change."
"We think that giving brokers the opportunity to continue serving their SME customers by accessing our compliance and reporting systems is a win all round – for brokers, for LDF as a funder and for the SME finance marketplace as a whole."
The FCA took over regulation of the consumer credit market which includes finance for small businesses from the Office of Fair Trading (OFT) in April 2014, and expects UK brokers dispensing consumer credit to work under its regulatory and compliance requirements.
In order to gain full FCA authorisation, brokers must meet detailed standards across areas as diverse as sources of funding, anti-money laundering procedures, policies for treating customers fairly and IT systems. They will also be required to submit plans and predictive models to the FCA across many of these issues.
