"Do lenders realise if they get this stuff wrong, they risk unenforceable loans, reputational damage and maybe compromising their authorisation?"
As an association of brokers, we have a responsibility to tell our members what is expected of them, and to check they’re reaching and exceeding the minimums standards. What’s a lot more difficult than that, is when we want to give the same hard stance with nationally recognised lenders.
Our Patron lenders must make sure that those acting on their behalf to carry out such activities are doing so in a compliant and competent manner.
If you’re undertaking regulated activities you need to have either full or limited permissions, or be operating as an appointed rep of someone who holds these permissions. If you don’t hold the right permissions and do undertake regulated activities you are committing a criminal offence. Be under no illusion. This is not a ‘turn a blind eye’ grade of misdemeanour; it’s a criminal offence, and this means that lenders are not off the hook. Accept business from someone without the necessary permissions from the FCA and the lender’s loan could be unenforceable. And you can’t claim ‘it doesn’t matter because I’m not dealing with regulated products’; it’s not about products, it’s about regulated credit activities.
How should they be gathering and keeping evidence that the brokers they deal with are compliant and competent? Do lenders realise if they get this stuff wrong, they risk unenforceable loans, reputational damage and maybe compromising their authorisation? And a further question arises: do you understand the food chain of where your business has come from? I mean, which broker gave to it whom to submit to you and did they all have the right permissions to do that; and how do you know?
Early this year the NACFB started a long programme of visits to our members to conduct an ‘MOT’ you might call it, to support brokers keen to run a compliant business. We want to support brokers, to prepare them for when your lenders or the FCA come knocking on your door asking for evidence of compliance. Is everything written down? Can you prove that what you’re claiming happens about your sales processes really happens?
Personally, when I look across this issue I can’t get my head round how any lender accepting business from brokers dealing within the FCA’s scope of CONC can afford not to be a patron and or deal with brokers that aren’t NACFB accredited. Why would you take the risk? I have to admit, some years ago, when I was Managing Director of a commercial lender myself, I did deal with brokers who weren’t NACFB members. And looking back I did that because the bar was set so much lower than it is now. But the regulatory machine has no reverse gear.