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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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Education
14th February 2008
March edition
Education is key to success in a contracted market and encouraging best practice is valuable at any time, argues Adam Tyler, Chief Executive of the NACFB.
2007 was, to borrow footballing parlance, a year of two halves. Few could have foreseen the way things played out at the end of the year from the relatively sunny start. Concerns from brokers at the beginning of 2007 seemed to revolve around the threat posed by inappropriate advice offered by brokers new to the commercial arena, but this seems to have tailed off a little due, understandably, to the pressures of the market on their own businesses. However the appropriate response to the issues of the inexperienced broker and the credit crunch are not a million miles apart as the one is now effectively causing the other. The pressures on residential brokers caused by the contraction in the market has left them needing to diversify and, as mentioned in the last column, many have turned their attention to commercial finance to make up the short fall in income.
The Association’s aim is to encourage best practice among these brokers too; to encourage them to join the association so we can help them on their way to providing their clients with a professional service. But the NACFB isn’t in a vacuum on this. Late in 2007, I spent a number of months meeting Patrons (lenders, lessors and other kinds of funders) of the NACFB, along with other associated trade bodies, such as the FLA, ABFA and CML. Whether these conversations were held at formal meetings, social events or industry gatherings, the same topic came up again and again: broker training and education: How could the Association help in producing a better informed commercial finance broker?
Now there may well be many among our membership who believe that they already offer the highest standard of professionalism, and my aim here is by no means to contradict them. An NACFB Broker is going to be a professional and have a professional approach to business, simply because of the Code of Practice they adhere to and the standards contained in it that they need to uphold. There are some lenders who choose to treat member brokers differently from non-members. But despite the influence of the Code of Practice, since I took over as Chief Executive of the NACFB, I have asked the question: “Is this enough for our members or the commercial finance industry as a whole – or should the Association be offering a more hands on, practical approach?” The conversations I have had with Patrons and trade bodies have perhaps gone some way to answering this – and the answer is that there is still work which needs to be done.
So, we have now begun to address these issues and provide training for our members. In addition we are looking to broaden the reach of our training, to include all brokers dealing with commercial finance, and specifically those looking to enter this market for the first time. As with all things, the training needed to start with the basics, although surprisingly some of our longest standing members attended our ‘Introduction to Commercial Finance’ course in February – even though it was very much a ‘back to basics’ day.
One of the fundamental points the Introduction to Commercial Finance is designed to get across is that commercial finance does not start and end with a commercial mortgage. The day acts as an introduction to leasing and asset finance, factoring and invoice discounting and bridging finance, as well as commercial mortgages, offering an insight to brokers about when these kinds of products could be useful for a client. Of course, not only do the different aspects of commercial finance need to be recognised, but it is also important to teach broker in how to deal with them with the ultimate aim to educate and train our members to approach commercial finance in a more holistic way. A broker should be aware that there are other funding options available – perhaps a leasing contract, or invoice finance arrangement - which might be more appropriate for the client. But the programme isn’t just aimed at just our members; we hope to be able to train and educate commercial finance brokers wherever possible within the sector.
The next phase of this programme is to complete the writing of an ‘Introduction to Commercial Finance’ programme to be delivered by a professional training company. The aim is that this course will operate as ‘stand alone’ training but also it will tie in with the Certificate in Commercial Mortgages (CeCM) qualification offered by the ifs School of Finance. Ultimately, this ‘Introduction’ could form part of an induction programme to brokers new to commercial finance and form part of membership to the NACFB and be recognised by lenders as a requirement before lending can be introduced.
So by encouraging best practice among new entrants to the market, as well as encouraging our own members to diversify their skills and product knowledge, we hope we can help and support brokers to survive in these tricky times.
Business Money
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