The NACFB Unregulated Broker Policy

It’s now offered in two flavours, Regulated and Non-Regulated. The latter goes hand in hand with our Unregulated Members Policy, a document which we spent a long time putting together and which, paradoxically, we’d like to see used as little as possible.

The recent changes to our industry have also meant revisiting our Code of Practice, a new version of which is now available. And we’ve long been talking about our nationally-recognised and industry-approved Code of Conduct, which has been all well and good for twenty-three years. None of these documents made mention of the Financial Conduct Authority, nor did they have very much to say on the intricacies of being an Appointed Representative.

Although the spirit, the underlying themes and values of the Code of Practice haven’t changed since the Association’s inception, the wording of our criteria and expectations was plainly in need of alterations, and so that was topic number one on our 2015 to-do-list. Now, finally, it can go into the “Completed Actions” tray instead.

A lot of the new rules can be translated into simple English as follows: the consumer needs protection: from lack of clarity, from unreasonable costs, from a shortfall of knowledge about commercial finance per se.

We still field questions from new and prospective commercial finance brokers asking whether we think they need to have full consumer credit permission. To answer that broadly, here are the things you cannot do if, as is the case with twenty-five of our 1500 members, you have been unable to get FCA permission.

You must not:

•    accept business from individuals, sole traders, partnerships of 3 or fewer partners or an unincorporated body; because the FCA thinks they probably don’t know enough to understand what’s going on, and so you’re in loco parentis
•    act on behalf of nor advise an individual or partnership of up to 3 persons in relation to a debt due under a credit agreement or a consumer hire agreement

Both debt adjusting and debt counselling are considered regulated activities and join the list of things you must not do if you don’t have full permission.

Debt adjusting includes negotiating with the lender or the owner, on behalf of the borrower or hirer for the discharge of a debt due under a "credit agreement" or a "consumer hire agreement". Debt-counselling means giving advice to a borrower or a hirer about the liquidation of a debt due under, again, a "credit agreement" or a "consumer hire agreement".

It’s our aim to encourage brokers away from a situation where they find themselves unable to help clients, and that means we won’t want large numbers of unregulated members. In fact, in a perfect world we would have no Unregulated Brokers on board at all. By setting strict criteria, we’d like to send out the message that going Unregulated is not the easy way out of scrutiny. Quite the reverse; it opens you up to greater scrutiny, in part because there is nowhere to hide.