FCA Compliance – Asset Finance Brokers

The NACFB Expo took place this week.  At the forefront of all asset finance brokers and lenders minds is the new FCA Compliance regime and it is clearly a concern for us all in the asset finance industry.  All asset finance brokers and lenders now have to re-apply for their Consumer Credit Licences in order to continue to write Consumer Credit business.  However in addition most of the lenders also require asset finance brokers to hold Consumer Credit Licences in order to write unregulated corporate business as well.

Many of the new requirements are good for the industry and will benefit us all in the long run.  Professional standards will improve and there will be more transparency with products, pricing and the way the products are sold.

By now all asset finance brokers and lenders will have obtained interim permission and some may have already gone through the application process for their new Consumer Credit licence.  Our date for application is not until October 2015.  I am hoping that by this time an element of common sense will have emerged once the FCA have a better understanding of the type of business most asset finance brokers and lenders write.  However the two main points at present which I feel need to be reviewed are as follows.

• Less than 10% of our and many other asset finance brokers business is actually regulated business within the Consumer Credit Act.  If the lenders agreed that a Consumer Credit Licence was unnecessary then some asset finance brokers could decide not to handle regulated consumer business.  They could then continue trading with unregulated business customers, similar to the position in the mortgage market.
• Do asset finance brokers really need categories D & E on their licence?  Some of the lenders are insisting that this is the case.  The only time most asset finance brokers get involved with debt adjusting is when an asset is placed in part exchange and the asset still has outstanding finance to be settled.  Does this small area really need the extensive extra provisions of categories D & E?

I am pleased that the NACFB have decided to host some compliance seminars that are being sponsored by Aldermore Bank.  This is a time when all of us in the industry will benefit from co-operation and the sharing of knowledge and experience.  It will be interesting to see how things develop as we move forward.

Keith Pallett, Managing Director.