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The NACFB is the only UK trade body dedicated to the commercial finance broker. We represent members from across the whole commercial finance market: from buy-to-let specialists and commercial mortgage advisers to vehicle finance brokers; from leasing and asset finance specialists to factoring brokers. All NACFB members comply with an industry recognised Code of Practice
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Seeing the old year out...
5th November 2007
Business Moneyfacts
December edition
As the end of 2007 and the beginning of a New Year fast approach, Adam Tyler, Chief Executive of the NACFB, looks back over the last twelve months - and forward to 2008.
As I am writing this I am engaged in the traditional annual chaos that is organising the NACFB AGM, and a gala dinner for 500 people. The Exeter office is always a hive of activity at this time of year. Not that it isn’t all year – but November is a particularly busy month of a very busy year; in fact the last twelve months have been eventful in the extreme.
At the beginning of the year, new membership criteria were introduced by the Association in response to fears expressed by brokers of ‘one trick ponies’: brokers who, rather than sourcing a deal from different lenders, pushed all their business to only one lender. At the same time, Associate membership was restricted to a two year period, after which any Associate would need to apply to become a full member. At the time this was put into place, we had no idea what the response from members was going to be and we anticipated a degree of resistance and protests that it was now too hard to become a member. So far, however, feedback has been overwhelmingly positive. Some have even called for processed to be tightened up even further.
In the early stages of 2007 there was little warning of the financial turmoil that was coming our way. The second half of the year has seen the sub-prime mortgage market go into meltdown and a certain Newcastle based bank hit the headlines for all the wrong reasons. The commercial property investment bubble seems to be deflating now as well – although this doesn’t affect NACFB members’ business much, as the majority of their business is either owner occupier deals, or a specific investment for a company, rather than properties for pooled investments. Against this backdrop, members have continued with ‘business as usual’, but market conditions are having an impact.
David Whittaker, a former President of the Association, remarked at the recent regional Workshop held on board HMS Belfast that this time was an ideal opportunity for brokers experienced in the commercial arena to be able to prove their worth. The market has contracted and lenders are becoming more choosy about the deals they will do and increasing the rates they charge. It takes real skill and experience to put a deal together to make it attractive to a lender to secure the best terms for a client. Money is not so easy to come by – and the result is that brokers with experience and knowledge will be able to prove their worth to their clients by finding them a deal that’s both more suitable – and also probably cheaper – than they would be able to find using only their own resources.
Another side effect could be seen as the market’s answer to the issue of the ‘one trick ponies’ mentioned at the beginning of this article, which caused the Association to tighten its acceptance criteria. Before the contraction in the market – the ‘credit crunch’ - brokers with little or no experience of the commercial market found it relatively easy to place deals as lenders were willing and eager to lend and there was plenty of money around. However, money is no longer so easy to come by, and brokers are having to use all their skills to place a deal.
The ‘one trick pony’ concern raised its head again with the publishing of the results of the recent Charterhouse survey into the commercial broker market. This revealed that one of the biggest concerns of commercial brokers is the fear that regulation will be brought to a currently unregulated market due to advice given to clients by brokers inexperienced in the commercial finance industry. How widespread the actual problem is, is unclear, but certainly brokers perceive it to be a big problem. The credit crunch might mean that brokers without the necessary experience, and for whom commercial finance is only a minor part of their business model, simply find it too difficult to place deals.
One issue which arose in the middle to latter part of 2007 was the case of Hurstanger vs. Wilson. At the time of writing this, the Association is in a consultation process with both its members and its Patrons to find the best way of responding to the implications of this ruling. The final debate will take place at our AGM on the 9th of November – so watch this space.
The final big project of the year is the launch of the new NACFB website. Due to go live in the next few days (by the time you read this you’ll be able to pay us an electronic visit) the site features a new ‘Find a broker’ search, information for members, an NACFB events calendar, legal & compliance updates and much more. It’s also still a work in progress – a new e-learning centre is being developed and will be launched in 2008. Bring on next year!
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