The National Association of Commercial Finance Brokers is looking to add IFAs and other intermediaries to its list of associate members in part to create a broader industry front to any possible future regulatory action.
In mortgage terms, NACFB primarily represents brokers of commercial mortgages, although its activities also stretch into the area of buy to let products, as well as representing leasing and asset finance brokers.
Set up in the early 1990s, the Association has a Code of Practice and can expel members for committing fraud or otherwise damaging clients and lenders.
Because the sector is currently unregulated, as compared with residential mortgages, it is felt increasing use of the code will be required by both brokers and lenders, says Keith Heron, chief executive.
“The NACFB is keen to talk to IFAs and general mortgage brokers about membership in a self-regulated body,” he says.
Patrons of the organization – effectively the major lenders – are also starting to view adherence to the Code and membership in the Association as a possible minimum standard for agreeing to do commercial loans business with brokers.
HSBC, one of the patrons, has already introduced such a rule for its lending, although Heron admits further adoption of such a demand may be held back on a lender by lender basis because of other factors affecting ongoing business.
On the regulatory side, Heron says EU legislative changes, such as the proposed Directive on mortgages, make it difficult to know just how the market for commercial mortgages may be affected.
Here, while the FSA does not currently seem keen to take on the sector, that does not mean it may not try to do so in future.
This makes development of an industry body adhering to successful standards criteria and with a critical mass behind it even more important in order to stake out industry ground were the regulator to move towards imposing mandatory standards, Heron adds.
The Association is boosting its training and competency credentials by supporting developments such as the Certificate in Commercial Mortgages, offered by the Institute of Financial Services – which has also developed the Diploma in Commercial Finance which seeks to meet the T&C needs of leasing and asset finance brokers.
In terms of the membership proposal for IFAs, the NACFB is looking to offer associate rather than full membership, on the basis that while commercial mortgages may make up just a fraction of the annual business turned over, it would still be worthwhile being able to plug into a network of lenders and brokers in order to stay on top of latest training and competency standards, and latest thinking in the area.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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