I’d like to share with you some figures that show the scale of what the FCA is facing – firms listed based on the highest-risk interim permission they held when the interim permission was created in April 2014. For example, 1% are grouped within high-cost short-term credit as this is the highest risk interim permission they hold:
Commercial debt adjusting 11,019 22%
Broker – other types 9,236 19%
Commercial debt counselling 7,237 15%
Limited permission credit broker 6,516 13%
Broker – home finance 2,661 5%
Debt Collection 1,036 2%
Home collected credit 822 2%
High-cost short-term credit 526 1%
Logbook lending 71 1%
Other 10,139 20%
That all adds up to 49,463 firms, of which about half – depending on exactly what’s hiding under the term "other" – appear to be commercial finance brokers. These firms had a two-year window between the last day of issuing Interim Permissions and the last day on which those Interim Permissions would be considered valid. Add to that those firms that came to the attention of the FCA since April 2014 and you can see the scale of the task.
The interim permissions did their job of easing everyone from OFT regulation to full FCA regulation – something like the footbath you have to paddle through on your way to the proper swimming pool. But of course the swimming pool is a very different matter. It’s much harder to get into difficulties in ten inches of water than in six feet of the stuff, and to stay afloat in this environment you need to master some very different skills.
Or maybe not so different. The FCA claims to have "eleven fundamental principles that firms must comply with at all times will apply to all authorised consumer credit firms and those with interim permission.
Most will be familiar for well run firms as they are generally similar to concepts the OFT used to apply when deciding whether to grant a consumer credit licence." But there are in fact a lot more specific requirements now and inevitably they are going to eat into brokers’ time a little more.
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Still, if we can make brokers’ day jobs a little easier, that will help to counteract the time we’re all spending on compliance this year. At the end of January I had (and took) the opportunity to pose questions directly to two Business Ministers at the same time. Matt Hancock, MP, and Toby Perkins, MP, were among the influential figures attending an All Party Parliamentary Group Micro Business meeting in the Houses of Commons. The NACFB was invited to attend and to enter the debate, so the voice of the commercial finance broker could be well represented. Around the same time I was also at a Business Innovation and Skills reception, hosted by the Secretary of State Vince Cable.
I hear the NACFB name referred to in Parliament and we are being invited to play a big part in decisions affecting commercial borrowing at the highest level. We are getting involved in major decisions on SME lending. This isn’t a step we plan to take in the future, it’s happening right now.
Finally, if you haven’t registered for our sixth Commercial Finance Expo (17 June, Pavilion, NEC Birmingham), the only real excuse we will accept is if the date clashes with a wedding anniversary or dental appointment. You can register to attend now, whether you’re a member or not: go to nacfb.org.uk and follow the events links. I hope to see you there on the day.
Adam Tyler is the CEO at NACFB