Issue 88 MARCH 2021
Broker COMMERCIAL
The award-winning magazine for the National Association of Commercial Finance Brokers
18 TURNING ENQUIRIES INTO LEADS How the disclosure process can help secure clients
34 WHEN THE LOAN SCHEMES END Filling the post-COVID loan scheme void with opportunity
A last line of defence Professional Indemnity Insurance uncovered
44 IT TAKES BOTH SIDES TO BUILD A BRIDGE Collaboration can unlock a more fruitful lending dynamic
50 TECHNOLOGY TO SURVIVE AND THRIVE Proving it ain’t what you do, it’s the way that you do it
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Contents
In this March issue NACFB News
Special Features
4 6 8
10-11 12-14
Note from Norman Chambers Updates from the Association Note from headline sponsor, Lloyds Bank Industry news round-up Patron news
22-23 25-28 30-31
32
34-35
36
Cambridge & Counties Bank: Leading the charge NACFB: A last line of defence? Haydock Finance: Funding outside the box Unity Trust Bank: Prescriptions for growth Ultimate Finance: What happens next? Arbuthnot Specialist Finance: Under the hammer
Industry Insight 38-39
British Business Bank: A year of loan schemes 40-41 Bridging Finance Solutions: Build back better 42 Aldermore: Maintaining connections 44-45 White Oak: Building a bridge
Opinion & Commentary
30 Patron Profile 16-17
LendInvest: My first year as CEO
Compliance Update 18-19
48 50-51
54-55 56
58
JPM Capital: Powered by people UTB: Beyond the first loan Collier Pickard: Technology to survive and thrive FIBR: Open up to more Listicle: Five ways to improve accessibility Five minutes with: Louise Preen, Business Development Executive, Merchant Money
Jo Blood: Standing corrected
Further Information KIERAN JONES Editor & Feature Writer
33 Eastcheap | London | EC3M 1DT Kieran.Jones@nacfb.org.uk JENNY BARRETT Communications Consultant
33 Eastcheap | London | EC3M 1DT Jenny.Barrett@nacfb.org.uk LAURA MILLS Graphic Designer
33 Eastcheap | London | EC3M 1DT Laura.Mills@nacfb.org.uk MAGAZINE ADVERTISING T 02071 010359
Magazine@nacfb.org.uk
NACFB: Turning enquiries into leads
Ask the Expert 20
46-47
50
44
MACKMAN Design & Production T 01787 388038
mackman.co.uk
NACFB | 3
Welcome
Norman’s Note
B
e wary of false dawns. Many have become jaded by the tantalising promise of freedom just around the corner, but this time is different. The Prime Minister’s recovery roadmap has the distinctive air of the possible sewn into it. Whisper it, but this really does feel like the last national lockdown any of us may have to endure. As we peek out from under the covers and prepare to enter society again, we can begin to make use of those ironically bought 2021 diaries we were gifted at Christmas. That diary can now at least have one fixed date pencilled in: Thursday 30th September 2021.
Norman Chambers Managing Director | NACFB
After an almighty run-up, the biggest intermediary trade show in the UK returns to Birmingham’s NEC. The phoenix-like NACFB Commercial Finance Expo 2021 is back – and boy are we ready to be under the same roof again. I will not run through the statistics for how and why it is the biggest trade show of its kind, you already know that – its reputation speaks for itself. We must however remain patient, as there is plenty of business to conduct between now and then. Professional Indemnity Insurance (PII) has continued to cause headaches for advisers from all industries. In the interests of complete transparency, I seek to address the concerns of our Members in this issue (from p. 25). In doing so, it has prompted further questions, and, as your trade body we will respond. It is an issue that strikes to the very core of what we do, our professionalism as an organisation in supporting the SME community with access to finance. Whilst PII premium increases may currently be a bitter pill for some to swallow, rest assured, we are working extremely hard behind the scenes to respond effectively.
4 | NACFB
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NACFB News
Association updates for March 2021
NACFB News NACFB Commercial Finance Expo to return in September
Association hosts inaugural MAG and PEG meetings
The NACFB Commercial Finance Expo will return to Birmingham’s NEC on Thursday 30th September 2021.
The NACFB has hosted its first Members’ Advisory Group (MAG) and Patrons’ Engagement Group (PEG) meetings.
Following confirmation from the UK government that mass gatherings will not be permitted until Monday 21st June, the Association has postponed June’s event, which was scheduled to take place the week before. The NACFB had anticipated a further postponement and secured the September date in reserve as a contingency measure. The event will be made COVID secure, with the introduction of new measures to maintain the safety and wellbeing of all attendees.
Both the MAG and the PEG will provide a sounding-board to gather feedback and identify opportunities for the Association to explore.
Last year’s Expo was cancelled owing to a combination of national lockdown and restrictions prohibiting large-scale events. Instead, the Association hosted two virtual Expos which welcomed a combined 3,000 delegates and 80 exhibitors.
Led by director Russ Lewis and business engagement officer Nicholas Murphy, the inaugural MAG meeting assembled representatives from NACFB Member firms, initially from brokerages that were recognised at last year’s Commercial Broker Awards. The group forms part of the NACFB’s wider internal restructuring and is designed to help steer the Association’s future direction.
Commenting on the event’s return, NACFB managing director Norman Chambers, said: “The UK’s largest intermediary-led lending event is back. I’ve spoken to hundreds of Members and Patrons over the last twelve months, all of whom are itching to return to do what they do best: relationship building.” Attendance remains free and with over 100 stands already secured, limited exhibition space remains. Find out more at: commercialfinanceexpo.co.uk 6 | NACFB
The complementary steering groups will act as think tanks for both the Association and the Board to utilise, investigating topical issues and developing innovative solutions to sector-specific problems.
The PEG, led by Martine Catton, gathered representatives from NACFB lender Patrons and shared insights into both the perception and role of the Association, ways in which market data can be better utilised, and how engagement with Members can be enhanced. The first meeting was attended by representatives from the Association’s support sponsors, alongside individuals who had expressed interest last year when the group was first mooted.
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Note from our Sponsor
Shifting perceptions Invoice finance can lead the way to recovery
Claire Ensell Director, Invoice Finance Lloyds Bank
F
or small business owners through to large corporate clients, having enough working capital is crucial in times like these. The more cash a business has the better it is positioned to survive, to invest, and to grow – but risk mitigation is also important as businesses manage through and transition out of the crisis. By releasing funds otherwise tied up in unpaid invoices, invoice finance solutions can play a central role in supporting companies as they begin to recover. However, invoice finance is often viewed as an alternative rather than a mainstream funding solution. Shifting this perception is key in order to ensure that businesses are aware of the broader benefits that it can unlock.
Accelerating recovery Invoice finance can help accelerate business recovery safely and sustainably. It drives efficiencies that improve resilience, helps manage risk and unlock opportunities. In the current climate this is particularly important as many businesses have had to close or reduce operations, explore new trading relationships, or contend with extended credit terms or payment delays, compounding already strained cash flow positions. Other benefits include: • Scalable funding: Available funding grows in line with business sales. • Increased flexibility: Bespoke solutions supporting both short and long-term requirements. • Power to negotiate: Earlier access to cash enabling 8 | NACFB
businesses to negotiate early payment discounts with suppliers. • Personal security: Reduced reliance on personal security with funding being primarily secured against outstanding debt. • Managing risk: Debtor Protection, an optional feature, can provide protection against customer insolvency and protracted default. • International opportunities: Facilities can be used to support businesses as they explore new markets.
Supporting clients Over the last 12 months, our specialist teams have ensured that we give clients the support that they need, using the flexibility of the product to adapt to individual circumstances. Our dedicated client managers are empowered to make decisions based on their personal knowledge of the businesses they work with. This has been crucial, especially in the early months of the pandemic when we received more than 3,000 inquiries from clients needing additional support. We have also developed our solutions in the face of changing business need and client expectations, launching a new product in partnership with Satago – Invoice Finance Manager – introducing single invoice capability, digital fulfilment and facility management, and enhanced protect and control tools. Alongside invoice finance, we can also offer client solutions using factoring and invoice discounting. The coming months will undoubtedly present new challenges, and the part that invoice finance can play will be invaluable to those businesses that already use our products and those with new needs that we can support. Lloydsbank.com/business/coronavirus/road-to-recovery-guides/ managing-working-capital.html Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.
We’re ready when you are We understand that situations may not always go as expected and businesses may need to adapt their plans and direction. At Close Brothers Business Finance, we support brokers with strong, secure asset finance solutions that can help protect their customers now, and in the future. Refinance/Capital Release – Access cash held in existing assets and ease cash flow Hire Purchase – Spread the cost of an asset purchase over time Lease – Low initial outlay, but quick access to what is needed We also have access to the Government’s Coronavirus Business Interruption Loan Scheme, but hurry, applications close on 31 March 2021. Ask us, we’re here to help you, help your customers. 0330 134 6787 www.closebusinessfinance.co.uk
Managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA. Visit british-business-bank.co.uk Close Brothers Business Finance is a trading style of Close Brothers Limited. Close Brothers Limited is registered in England and Wales (Company Number 00195626) and its registered office is 10 Crown Place, London, EC2A 4FT.
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Industry News
Industry News 1. COVID schemes deliver £73bn of loans to 1.6m SMEs
3. Councils fail to hand out £1.6bn of COVID grants
5. FCA issues guidance on the fair treatment of vulnerable customers
The latest figures published by HM Treasury have revealed that almost £73 billion has been drawn down by approximately 1.6 million businesses through government-backed coronavirus lending schemes. Almost 29,500 Bounce Back Loans were approved in February, bringing the total number of SMEs to access the scheme to over 1.5 million. More than £45.5 billion has now been lent through this scheme. Almost 92,500 businesses have now accessed £22 billion through the CBIL scheme.
Figures from the Department for Business show that councils across Britain failed to hand out more than £1.6 billion of emergency COVID grants to struggling businesses, causing fury in Whitehall. Craig Beaumont, of the Federation of Small Businesses, said: “We should be seeing local authorities in a big race to stop supply chain businesses going bust, yet most are still at the start line and have not got discretionary grants out the door. Full discretion has made councils afraid of making mistakes and wanting more guidance from government.”
The Financial Conduct Authority (FCA) has published final guidance clarifying its expectations of firms on the fair treatment of vulnerable customers. The guidance aims to drive improvements in the way firms treat vulnerable consumers so that they are consistently able to achieve outcomes that are as good as everybody else. People can find themselves in vulnerable circumstances at any time; 27.7 million adults in the UK now have characteristics of vulnerability such as poor health, experiencing negative life events, low financial resilience, or low capability.
4. Return to growth expected in second half of 2021
6. Lifting restrictions should see economic bounce back
Experts are predicting growth of up to 4.6% for Scotland this year as the country’s economy recovers from the pandemic. After an estimated drop of 10.6% in GDP last year, the economy north of the border is expected to grow by between 3.6% and 4.6% in gross value added (GVA) terms in 2021, depending on the speed of the recovery. The wider UK economy will see negative growth in the first quarter of up to -2.8%, followed by a gradual return to growth from the second quarter.
The Governor of the Bank of England has told MPs that the economy was performing better than expected considering the latest COVID restrictions, citing the adaptability of the British people. Andrew Bailey said the Prime Minister’s reopening roadmap should result in the economy growing rapidly over the next six months, getting GDP back to its pre-pandemic levels by early 2022.
2 2. Latest lockdown saw businesses furlough 900,000 in January Figures show that the latest lockdown saw businesses furlough another 900,000 jobs in January. A total of 4.9 million wage bills were paid by the Treasury under the furlough scheme at January’s peak, surging from below four million for most of December when more businesses had been allowed to open. It took the number paid to stay at home to its highest level since the end of July. Data from HMRC shows that number fell to 4.7 million by the end of February. 10 | NACFB
4
7. BoE could lead the world with crypto Ron Kalifa, the former boss of payment processing company Worldpay, has urged the Bank of England to develop its own crypto-currency and start regulating established coins like bitcoin. He said: “Britain should get ahead on this. Why leave it to China?” Kalifa contends that a central bank digital currency would provide a level of state-backed stability that bitcoin and other cryptos cannot, with lower transaction costs.
8. BDO calls for targeted tax incentives to boost UK manufacturing Two thirds of manufacturers (65%) would commit to greater investment in the UK if incentives for capital expenditure were increased, a new survey from accountancy and business advisory firm BDO has found. The poll of more than 200 UK manufacturers also found an overwhelming majority (61%) who said that a simplification and extension of research and development tax reliefs would help drive further investment in innovation.
8
10. Nearly 800,000 homes at risk of being repossessed
9 9. VAT Deferral New Payment Scheme – online service opens Over half a million businesses who deferred VAT payments last year can now join an online VAT Deferral New Payment Scheme to pay it in smaller monthly instalments, HMRC has announced. To take advantage of the scheme businesses will need to have deferred VAT payments between March and June 2020, under the VAT Payment Deferral Scheme. From this month, they will be given the option to pay their deferred VAT in equal consecutive monthly instalments.
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The Social Market Foundation (SMF) estimates that some 770,000 families are at risk of losing their homes if they suffer a loss in income when a ban on repossessions ends in April. A quarter of the homeowners at risk of having their property repossessed work in the retail and manufacturing sectors, the SMF said. Scott Corfe, research director at the SMF, warned the Government needs to prepare for “…a possible spike in evictions and repossessions given many households will not be able to pay their mortgage if they lose their jobs.”
10
Patron News
Patron News LendInvest announces ‘Strategic Partners’ cohort for 2021
Transportation and storage sectors surge as online retail grows
LendInvest has selected its Strategic Partners for 2021, with 35 leading broker firms joining the programme.
The growth of online retail has driven a significant increase in the number of companies in the transportation and storage sector since 2013, Paragon Bank analysis has revealed.
The NACFB Patron’s Strategic Partners programme recognises key broker firms who submit a high level of consistent business to LendInvest and provides a range of benefits as a result. Firms who are awarded Strategic Partner status can access dedicated staff to service their cases, regular review meetings and bespoke training, and have exclusive access to preview new products and criteria changes ahead of full launch. LendInvest Strategic Partners are also invited to focus groups, dedicated webinars and, when safe to do so, face-to-face meetings with key business stakeholders and the LendInvest founders. Sophie Mitchell-Charman, sales director at LendInvest, commented: “It’s very exciting to launch our Strategic Partners programme for 2021. After a busy start to the year it’s great to be able to continue by rewarding our partners that continue to choose LendInvest to get their deals done. It looks to be a big year for the business, so we’re glad to have likeminded brokers on board that share our ambition to make property finance simple for our borrowers.” 12 | NACFB
The NACFB Patron’s review of Companies House data shows there has been a 155% increase in businesses registered in that sector since 2013, the second highest growth sector of the period. In total, 163,783 transportation and storage companies were registered in the 2019/20 financial year, according to the statistics. The growth of this sector aligns with a significant increase in online retail over the same period. Dale Trenam, head of transport finance at Paragon Bank, said: “The way we shop is driving significant changes in the transportation and storage sector, fuelling demand for distribution warehouses and increasing the number of self-employed courier businesses. “It is estimated that every £1 billion of additional online retail spend requires approximately 1.36 million sq ft of warehouse space. With UK online sales forecast to rise by up to £67 billion over the next five years, we could see e-commerce drive additional requirements of 92 million sq ft and that creates opportunities for more delivery businesses also.”
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Patron News
Patron News MFS secures additional new funding line of £200m
SmartSearch: Lessons should be learned from BBL fraud
Market Financial Solutions (MFS) has secured its second funding line in 2021, worth £200 million from a leading global hedge fund. The new credit line will help MFS fund large loans fast and development exit loans for significant property projects. It will ensure the NACFB Patron can take on larger funding cases that some other bridging lenders are not equipped to handle.
SmartSearch has called on lenders, brokers, and conveyancers to learn the lessons from the Government’s failure to prevent the loss of billions of pounds in COVID-related fraud over the past 12 months.
The funding line has been sourced from a leading global hedge fund that has over £10 billion in assets under management. This latest arrangement is part of MFS’ long-term goal of increasing its loan book and expanding its institutional funding partnerships. In January, MFS successfully secured a £150 million credit line to meet the growing demand for its tailored bridging loans. Paresh Raja, CEO of MFS, said: “All successful funding partnerships are built on trust and transparency. Investors want to engage with lenders that have the experience and expertise to take on complex cases, deliver bespoke solutions, and come up with creative exit strategies. This latest news is a reflection of the trust and confidence MFS has effectively established over the years with its funding partners.” 14 | NACFB
The NACFB Associate Patron shared that a lack of due diligence and robust ID verification has left the door wide open for organised crime gangs to exploit the loan schemes. John Dobson, CEO at SmartSearch said these frauds were made possible due to a lack of joined up systems, despite all the information being available to raise flags when bogus applications were being made. And without moving to more secure methods of verification, regulated firms in the property sector face the same threat. He said that one of the key lessons of the last year is that increasing use of technology is the most effective way to protect businesses from falling victim to fraud. Dobson added: “This should serve as a stark reminder to all regulated businesses that when it comes to fraud we should be working at a heightened state of alert because as long as you’re using manual methods of ID verification, you’re going to be vulnerable.”
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Patron Profile
A year is a long time in lending Reflecting upon my first twelve months as CEO Rod Lockhart Chief Executive Officer LendInvest
W
hen I first stepped into my new role as chief executive officer in January 2020, I was expecting a challenge ahead. I knew I’d be taking on a new level of responsibility for the future strategic direction of the company, and realistically, managing a longer to-do list than I’d ever dealt with before. It is safe to say however, that I could never have predicted the events that would unfold globally in the coming months – it soon became clear that we would be navigating entirely uncharted waters. On 20th March 2020 the UK entered its first national lockdown, forcing a country-wide move to remote working, and marking the beginning of a long period spent at home for the majority of us. At LendInvest we have always led with technology first. This meant that thanks to our cloud-based infrastructure, the business was able to transition somewhat seamlessly to remote working overnight and remain open for business throughout lockdown. Not only did this prove vital for our existing customers, but also provided support for new borrowers at a time of great uncertainty. We proved ourselves adaptable, and I thank the entire LendInvest team for continuing to adapt to the ever-evolving landscape. 16 | NACFB
It would be wrong to suggest it has all been smooth sailing, and as with any obstacle, came the opportunity to seek new and improved solutions for our customers. The housing market undeniably suffered setbacks as a result of lockdown. With valuers unable to access properties for a prolonged period, the team worked quickly to develop a desktop valuation product, becoming one of the first specialist lenders to do so. We not only took a fresh approach to developing new products, but supported our customers by making core improvements to our internal processes and launching new communications initiatives to keep our brokers and borrowers up to date with our latest product updates.
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It would be wrong to suggest it has all been smooth sailing, and as with any obstacle, came the opportunity to seek new and improved solutions for our customers
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We have witnessed time and time again the benefit of staying close to our brokers, listening to what they and their clients need and adapting our products and processes to better serve them
Throughout the summer we ran a series of new product webinars, launched broker Slack integrations and prioritised tech projects that would ensure we remained available and ready to lend when our customers needed us. I’m pretty confident in saying we took the right approach, as we announced a record-breaking Q3 for signed bridging applications, our highest quarter to date and by Q4 we were receiving record-breaking levels of buy-to-let applications. Keeping the borrower front of mind through the crisis and adapting to the market as it responds to new restrictions and forecasts, has been pivotal over the last year. We have witnessed time and time again the benefit of staying close to our brokers, listening to what they and their clients need and adapting our products and processes to better serve them. We were delighted to become a CBILS accredited lender and are now better able to support our borrowers and brokers with CBILS products. After a turbulent year, it was hugely rewarding to report a strong set of interim financial results and in the same month, see LendInvest win Buy-to-Let Lender of the Year at the NACFB awards for the second consecutive year. While the end of the year brought a number of successes, we were
deeply saddened by the death of our chief financial officer, colleague and friend Angelie Panteli. It is after this tragic loss, that we have decided to make Motor Neurone Disease Association our charity of the year for 2021 in memory of Angelie. One year on, I don’t think I’ll be alone in saying the past 12 months have been challenging in ways that none of us could ever have imagined. While in the UK, the year didn’t start in the way we would have wanted it to, I’m proud to say that at LendInvest we hit the ground running. In January we kicked the year off with our very first virtual conference for brokers, attended by more than 200 intermediaries, and announced our latest major funding partnership, a £500 million investment from J.P. Morgan to fund future buy-to-let loans. This new injection of funding will allow us to further expand our buy-to-let offering and continue to deliver the tailored products that landlords truly need in the current climate. We could not have navigated the last 12 months and pulled off these achievements without the support of our brokers and the sheer resilience and agility of the LendInvest team. At LendInvest, we’re looking forward to supporting our brokers and borrowers over the year ahead. NACFB | 17
Compliance
Follow my lead Turning enquiries into deals Claire Cheung Compliance Officer NACFB
your supply of services and the business relationship. If you’re an NACFB Member, you can use our template which can be downloaded from our website once you have logged in.
S
Whilst this sounds straightforward, data analysed from our Minimum Standards Reviews shows that the issuing of ToBs varies considerably. Broadly speaking, Members in the asset and leasing space tend to issue terms later in the financing process than their counterparts in the property space. For example, ToBs can be presented at the commencement of a deal (most common) or once the Fact Find and indicative terms have been sourced from a lender.
The initial approach
There is no right or wrong answer, except that any ToB or Initial Disclosure Document (IDD) or equivalent must be issued in
ome intermediaries assume that enquiries and leads are one and the same, but from a compliance and a sales perspective, they are very different animals. Knowing how to distinguish one from the other can help brokers remain compliant and save valuable sales time.
An enquiry is a prospect who shows some interest in your products or services. A prospect might be an individual or a company. An enquiry is not confirmation that the prospect wants or is able to buy from you. A lead, on the other hand, is a prospect who has made an enquiry, wants your product or service, can afford it, and is in a position to buy straight away. It is worth noting that although leads should be your priority, enquiries may deserve some of your time – to nurture them into leads. This can be done with marketing.
The next step To convert your lead into a client, you should issue them with your Terms of Business (ToB) alongside a Privacy Notice (PN). The Terms of Business is the contract between the broker and the client. It defines 18 | NACFB
“
After the ToBs have been issued, it is vital to get them signed by the client as quickly as possible as this acts as confirmation to proceed
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Full and proper disclosure is just one way the Association and its Members maintain a kitemark of professionalism and quality, plus it means the minimum standard requirements for membership are being met
good time – before the client proceeds with an arrangement – so that they are aware of any associated fees. We have a basic journey framework which most of our Member brokers follow:
•
Establish the existence and nature of any financial arrangements with a lender that might impact upon the broker’s/firm’s impartiality in promoting or recommending a credit product.
• ToB or IDD and PN issued • Confirm whether the broker/firm acts independently or not. • Fact Find and KYC completed • Source lender
• Ensure that any disclosure about the extent of a broker’s/firm’s independence is prominent and in accordance with the rules on being clear, fair, and not misleading.
• Present options/suitability letter • Finalise and drawdown
Regulatory changes Initial disclosure has come under increased FCA scrutiny in recent months and earlier this year, the NACFB wrote to all Members outlining new rules for regulated brokers, which came into force on 28th January 2021. The rules relate to how commission is both received from lenders and disclosed to clients. To summarise, before a client enters into a credit agreement or consumer hire agreement, brokers must disclose to the client, in good time, the nature of commission or other fees which they (the broker) might be paid by the lender or third party. The broker must also tell the client if the commission or fee may affect the impartiality of the recommendation, and if it will have a material impact on the client’s transactional decision to enter into the agreement. As such, we suggested that all brokers/broker firms took the time to review their financial promotions to:
• Establish whether the commission received may vary depending on the lender or product or other factors. For best practice, we recommend that non-regulated brokers follow the rules as well to avoid any potential misunderstandings which could, ultimately, support a client’s claim in the event of a complaint or legal action. After the ToBs have been issued, it is vital to get them signed by the client as quickly as possible as this acts as confirmation to proceed. A traditional wet signature or an electronic one, such as DocuSign, is acceptable. Ensuring brokers have the correct documents in place, is one of the reasons why our Patrons prefer to work with NACFB Members. Full and proper disclosure is just one way the Association and its Members maintain a kitemark of professionalism and quality, plus it means the minimum standard requirements for membership are being met. Remember, all templates of initial disclosure documentation are available to download from the NACFB website, and the compliance team remains on hand to support Members with these changes. NACFB | 19
Ask the Expert
More productive, less achy
Q Jo Blood Managing Director Posture People
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orking from home has become the norm in the commercial finance sector and some of us may never return to the office on a full-time basis. Whilst many are lucky enough to have support from their employers to help with the set-up of a home workstation, others must take on the responsibility themselves. We talked to Jo Blood, managing director at Posture People for guidance on how to work more comfortably and safely from home.
Is a separate work area a necessity or a luxury?
Working on the sofa might sound idyllic but, can lead to numerous back problems down the line. Where possible, we believe that a separate work area is beneficial for home workers where you can set up a proper chair, desk, and equipment.
What about space? You don’t necessarily need a separate room. 20 | NACFB
&
With a little bit of space planning and clever furniture, you can make any little nook into a productive work area. Perhaps you have a recess under the stairs, or space in the hall or on the landing that can be made available. The kitchen table is popular, although this often means you must pack up the office at the end of every day.
What sort of chair is best?
to touch the screen. If you use a laptop, we recommend setting it up on a laptop stand to raise the height and then use a separate wireless keyboard and mouse to ensure the screen on the laptop is in the correct position.
A
If you tend to sit for long periods of time, we suggest investing in a good ergonomic chair to support various postures throughout your working day. If you do not have the space or funds for one, you could make some adjustments to your current chair using sitting wedges to angle your pelvis forward slightly. Better yet, a ‘backfriend’ will give you a bit more support.
Where should the screen be placed? We think this must be the number one sore neck culprit. Making sure that the top of your screen is in line with your eyebrows stops you from dropping your neck or slouching over to view the screen. Then all you need to do is put your arms straight out in front of you. Your screen should be an arm’s length away with your fingers able
What about taking breaks?
When working in an office we have prompts to move around and take a break such as making colleagues tea or chatting around the water cooler. These little micro-breaks are great productivity boosters and prevent you from sitting down all day. When you are working from home, try setting yourself little reminders to take proper breaks. If you are using Google Chrome, we recommend the free Posture Minder app. Its quirky little reminders always encourage us to sit up straight.
How can we avoid aches and pains? If you don’t have access to a landline, you may text and email from your mobile. This can cause ‘tech neck’ from dropping the head to look down at the phone. To prevent this, lift your phone to meet your eye line. You could also try some simple desk exercises. We cannot stress enough how important is to try to get as much movement into your day as possible.
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Leading the charge Electric vehicles close to ‘tipping point’ of mass adoption Simon Hilyer Senior Business Development Manager Cambridge & Counties Bank
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cross the UK, the focus on sustainability continues to increase and over the last couple of years, the government has placed climate change higher on the agenda.
It pledged several initiatives to increase the number of Electric Vehicles (EVs) in use, making it easier for businesses to go green. Several penalties were also introduced for petrol and diesel vehicles. At Cambridge & Counties Bank, we commissioned research1 to better understand broker and SME sentiment towards switching to asset classes that are more environmentally friendly and tax efficient. Here are some highlights from our findings.
Research highlights For the tax year 2020/2021, the government has reduced Benefit in Kind (BiK) tax, payable by employees with company cars, on full battery electric vehicles (BEV) from 16% to zero. Thereafter it will increase to just 1% in 2021/2022 and 2% in 2022/2023. Our research revealed that 93% of brokers believe that the introduction 22 | NACFB
of the 0% BiK tax rate will have a positive impact on the uptake of EVs by UK businesses. The government is also extending the first-year allowances for new EVs, such that businesses can now reclaim 100% of their first-year allowance on the purchase of zero emissions vehicles up to April 2025. Further incentives include the introduction of vehicle registration tax exemptions, plug-in car grants, and no city congestion charges. These are all main policy mechanisms used to make EVs more appealing to business customers. In late 2020, the government also announced that new cars and vans powered wholly by petrol or diesel will be banned from sale in the UK from 2030. It is part of what PM Boris Johnson calls a ‘green industrial revolution’ to tackle climate change and create jobs.
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93% of brokers believe that the introduction of the 0% Benefit in Kind tax rate will have a positive impact
Our research revealed that 68% of SMEs ‘wholeheartedly’ agree with the ban, with 28% believing that it should be brought forward to 2025. Also, 97% of brokers believe this will have a positive impact on the uptake of EVs by UK business over the next 12 months.
What else is driving this change? Clear skies over London during the first lockdown gave us a glimpse of how switching to EVs could benefit the planet. Policy, regulation and customer demand will play a big part in encouraging businesses to adopt more climate-friendly assets and our research found 94% of SME owners believe that UK businesses that use vehicles have a responsibility to switch to EVs as soon as possible, with 46% believing this is a priority. Fortunately, both the number of charging stations and the driving range of EVs are growing. The Tesla Roadster for example now has a range of 600 miles.
Our new thinking At Cambridge & Counties Bank our response to the research, the government initiatives and customer demand is exciting. We have given pure EVs their own asset class and launched Pure Electric Vehicle Finance which comes with an initial three-month deferred payment period.
The future is now It’s not just policy and regulation that will accelerate the transition to greener asset classes, the little things can make a difference too. ‘Green teams’ are starting to emerge within businesses who’ve come together to educate, inspire and empower employees around sustainability.
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94% of SME owners believe that UK businesses that use vehicles have a responsibility to switch to EVs as soon as possible
Here at Cambridge & Counties Bank, we’ve worked closely with the Investors in the Environment (iiE), a national environment accreditation scheme, to improve our carbon footprint. Our efforts have been recognised and we are proud to have received several awards from iiE, including the Green Award for five consecutive years since 2015. The market for pure electric vehicles is young and growing. We’re on the journey to a greener future and we’re committed to supporting and encouraging our brokers and customers to join us. If you would like to find out more or want our help, please get in touch with our team of expert business development managers on 0344 225 3940 or email af@ccbank.co.uk 1 Research among 100 senior decision makers at UK SMEs conducted by PureProfile between the 7th and 16th December 2020
NACFB | 23
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Special Feature
The last line of defence Professional Indemnity Insurance uncovered
Norman Chambers Managing Director NACFB
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ntil quite recently, the need for Professional Indemnity Insurance (PII) was rarely questioned by commercial finance intermediaries. For the most part it was taken as given, but a steady stream of reports on the escalating cost of cover coupled with reduced availability across numerous sectors has brought the matter into sharp focus for brokers and other advisory professionals. Andrew Champion, managing director at Towergate Insurance sums up the situation when he says: “…the PII market is currently the most difficult it has been for probably 40 years. A sustained period of cheap premiums combined with emerging risks has led to losses for insurers and an unprecedented withdrawal of capacity from the market. The far smaller pool of insurers still offering PII has led premiums to spiral and the cover on offer to be restricted in many cases.” Ian Saxelby, of fellow insurance brokers Lockton, shares that the market finds itself in this position because a 2019 Lloyd’s of London thematic review which found: “…non-USA Professional Indemnity Insurance was the second worst performing class of business amongst its syndicates. It also showed that whilst the frequency of claims NACFB NACFB || 25 25
may have remained fairly consistent, the severity of claims (the total value of losses experienced) had reached unprecedented levels.”
out any compensation money if an adjudicator ruled in the client’s favour? Is it even worth the risk?
As reported in the November issue of Commercial Broker, on average, NACFB Members have seen their premiums rise by as much as 500% – with the larger brokerages at the harsher end of the scale. Naturally, I empathise with our Members, particularly, as the vast majority have never had to call on the cover. As an Association, we have been lobbying hard for intervention, but I fear that increased premiums will be the direction of travel for some time to come, and as uncomfortable as it is, we may just have to get used to it.
Consider too, these days, SMEs are more likely to involve lawyers or claims management firms at an earlier stage of the complaints process. “We live in a very litigious world and so PII cannot just be disregarded because premiums and/or excesses increase. If a loss is suffered, a good lawyer will explore all avenues to obtain reimbursement. Any intermediary involved in a transaction could certainly find themselves in the crosshairs,” says Ian Saxelby.
Another independent trade body has also taken up the issue. Earlier this year Jonathan Geldart, director-general of the Institute of Directors, wrote to business secretary Kwasi Kwarteng warning him about the spiralling costs of PII and directors and officers (D&O) liability cover. The IoD received a similar response to NACFB lobbying in that HM Treasury said it was engaging with the insurance industry to: “understand what factors are affecting the availability, or increased premium price, of cover across sectors.” In my opinion, this is not an issue that has the luxury of time to wait for a resolution, so we will continue to pressure for urgent review via both HM Treasury and the Financial Conduct Authority. Despite the wider market conditions, taking out PII remains critical for the following reasons.
Protection against SME complaints PII is designed to cover compensation payments and legal fees if a client successfully sues you for making a mistake that leads to financial loss. As a commercial broker, could you really afford to pay 26 | NACFB
He makes a valid point. As a broker would you have the perspicacity or time to deal with these representatives in the appropriate manner? The insurance companies do, and they may be more likely to resolve the complaint faster and in your favour – if you can prove compliance with the necessary processes and procedures.
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These days, SMEs are more likely to involve lawyers or claims management firms at an earlier stage of the complaints process
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There is always someone on the lookout for the next PPI-type scandal … who knows what sort of complaints could emerge a few years from now?
Remember, there is always someone on the lookout for the next PPI-type scandal and whilst I’ve no reason to believe that commercial finance brokers might be in the firing line, who knows what sort of complaints could emerge a few years from now? Andrew Champion said: “…the costs of defending against spurious claims can be prohibitive and without such cover in place, even if it is not a regulatory requirement, firms are exposed to potentially existential risk.”
Reassurance for SMEs Discerning SMEs will only do business with intermediaries who are properly protected. Knowing that their broker has PII in place gives them peace of mind. This means that not only can cover help to win business, it also acts as a great marketing tool.
Lenders require PII of brokers Some lenders require brokers to have PII cover as a prerequisite of doing business. That’s all very well but it’s not a universal standard and currently, there are some inconsistencies in administration from the lenders which do require it. Some will check PII is in place for every deal; others will check annually; and, we know
anecdotally at least, that some lenders are prepared to look the other way for a broker without cover if the deal is big enough.
FCA requirements Whilst PII is required of brokers engaging in regulated activities such as financial advice, insurance distribution, or mortgage credit intermediation, from what I can see, there is no universal regulatory requirement for brokers to maintain PII cover. Perhaps this is not surprising given the breadth of sectors, activities and products covered by financial intermediaries. However, when discussing this with one of our Patron lenders, it was suggested to me the FCA Handbook does set out a number of high-level standards in its Principles for Business (PRIN 2.1 The Principles) which, it could be argued, suggest that PII would be required to fulfil some of the tenets. I won’t list them all here but urge you to take a look when you get a moment. The debate in this regard is ongoing.
PII is a requirement of NACFB membership Like many other professional membership bodies who provide advice, offer a professional service, or handle client data and NACFB | 27
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By taking out PII, the act itself could be a tacit acknowledgement that asset brokers are providing advice
intellectual property, the NACFB has required its Member brokers to have PII since 2002. In my opinion, it is integral to doing business the right way. Published in our Code of Practice, this sentiment is at the core of the NACFB’s mission to embrace the highest industry and regulatory standards.
Do asset finance brokers need PII? There is though some debate from asset finance brokers who argue that PII is not relevant to their business model because they do not give advice, nor do they charge the client a fee. Instead, they present options from which the client is free to choose or go elsewhere. Any fiduciary relationship therefore rests with the lender. Mike Geddes, NACFB board director, would take the argument a step further. He says that by taking out PII, the act itself could be a tacit acknowledgement that asset brokers are providing advice. At present, this premise remains untested, but it is an interesting point which deserves some consideration. Mike went on to say: “From the viewpoint of my own brokerage, I would agree that before the cost of premiums skyrocketed, we hadn’t questioned the need for PII but now it seriously impacts cashflow and takes up a much larger proportion of our budget. We could employ three more people for what it costs us. Fortunately, we can accommodate the expenditure and believe our processes and procedures are sufficiently robust to knock back any potential 28 | NACFB
claim. In the 15 years since inception, our brokerage has never had to call on its PII cover which has prompted us to question its true value and consider alternatives such as self-insurance. “Having said that, I recognise that many asset brokers are not in such a strong financial position and we have to consider what’s best for our sector not just ourselves. That’s where the NACFB comes in – to question and to guide – as well as to lobby.”
The future Andrew Champion says: “We do not yet see any sign of capacity returning to the market meaning that the situation is unlikely to improve before the end of 2021. Ironically though, it is more important than ever to have good PII in place. The economic downturn caused by COVID is expected to lead to more claims. Businesses under financial pressure look for alternative sources of income and a claim through a no-win, no-fee law firm might seem like an attractive option if cashflow is tight.” As it stands, our lobbying will continue. We will also continue to discuss and debate the issue to find other solutions to help our Members and their clients. We know that we cannot force insurers to provide cover if they deem the risks too great, but the current situation is detrimental to the entire market. Insurers could price themselves out. Lenders could see business diminish. Brokers could exit the sector. And clients – the SMEs – could suffer from reduced choice at a time when access to finance remains valuable and in demand.
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Funding outside the box Structuring non-traditional finance solutions Andrew Darby Structured Finance Director Haydock Finance
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sset finance specialist Haydock Finance has grown and evolved significantly over the last two years. With a lending facility in excess of £450 million, Haydock has been able to support a record level of SMEs with a full suite of solutions including hire purchase (HP), lease, and refinance. New business levels have also been boosted by our partnership with the British Business Bank’s Coronavirus Business Interruption Loan Scheme (CBILS). By December 2020, Haydock had successfully distributed more than £100 million of their HP and refinance CBILS product offering. I lead Haydock’s structured finance division alongside Terry Hounsome. Over the past 18 months, Terry and I have developed this bespoke finance solution into a multimillion-pound channel, with an average deal size of £400,000. The aim of structured finance is to provide tailored solutions to opportunities that may not be inherently obvious via traditional financing structures. For this reason, deals tend to be of a higher value and often involve multiple assets and stakeholders which adds a level of complexity. It has often been difficult to define what type of deal will require a structured finance solution. However, what we have identified is that the solution relates more to the customer’s business needs and how these needs evolve to support future growth. Based on our collective commercial experience, gained across various roles in corporate banking, sales and credit, a degree of objectivity needs to be employed when reviewing opportunities and that can often fall outside of a funder’s scope. 30 | NACFB
My fellow structured finance director, Terry, shares: “Deals tend to be more complex by perception alone, a solution is often not immediately obvious, and it might not look like a deliverable deal in its present shape.” With a strong conviction-led approach, we both evaluate deals and assess how they can be engineered so that a solution can be identified and then reviewed in conjunction with Haydock’s credit team. Often described as the line between sales and credit, structured finance pulls together the borrower and the lender to deliver an outcome that suits both parties in the long term. We closely monitor the sales process and the credit function to ensure that any solution that we structure has a higher degree of certainty when flowing through the credit process. Firstly, we look to gain insight and an understanding into the objective of the client and what they are seeking to achieve, moving then to how that transaction will benefit the business and how best it can be served via a funding proposition from Haydock.
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There is never really a time when structured finance should not be used, but we often see transactions that are linked to MBOs/MBIs and other leveraged transactions
Terry adds: “We are essentially ironing out the wrinkles to facilitate a solution and enable the transaction to navigate through the deal process as smoothly as possible. We take ownership of the deal from cradle to grave, with input and direction provided along the funding journey to both our internal and external stakeholders. We fundamentally believe we are not a post-box to shift things through, but a function that adds significant value for all parties.” With no typical deal type and no sector constraints, structured finance can provide scope and opportunity across a multitude of businesses, ranging from production lines, large haulage operators, automotive manufacturers, plant and machinery, contractors’ plant, and fleet operators.
There is never really a time when structured finance should not be used, but we often see transactions that are linked to MBOs/MBIs and other leveraged transactions. Under CBILS, Haydock’s structured finance team have been able to provide additional support, such as assisting in structuring amortisation profiles to provide further easement to clients’ cashflows. Whilst CBILS has not been a magic wand that can solve every challenge, it does allow us to be more innovative and flexible in providing tailored solutions for our customers. With the outlook uncertain for many, the CBILS support removes a degree of that uncertainty when reviewing the wider economic risk and the impact it may have on the financial performance of borrowers.
A New Identity for a World of Difference We are a forward-thinking asset finance specialist, growing our service and adapting our identity to emphasise our market position. But some things won’t change because our foundations are built on our heritage. We’re committed to developing funding solutions that fit the needs of your customers. So, whilst our look may have evolved, our awardwinning service is always at the heart of everything we do.
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Special Feature
A prescription for growth Opportunities in the healthcare sector Paul Kelly Relationship Manager Unity Trust Bank
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e are all only too aware of the impact the coronavirus pandemic has had on our hospitals, and the enormous toll it has had on the incredible individuals who work within the NHS. But like every industry, the implications of the pandemic have spread across the entire healthcare sector, from care homes to domiciliary care, community pharmacists, dentists, and GPs. With the beacon of light that the vaccination programme holds, what will the future look like for the healthcare market, and what will the funding requirements be for businesses navigating a post COVID-19 era? In the social care sector, particularly within elderly and nursing care, the impact of the pandemic has arguably been the most acute. Care home operators have continued to focus on protecting vulnerable residents, but disruption to the sector has resulted in restricted access to capital. Prior to the pandemic, we were seeing an increasing number of new entrants in health and social care, often with a greater focus on business management, data and insight, and the opportunities technology offered for improving the provision of care. As activity normalises post-pandemic, we expect to see a return to this pattern of acquisition and investment, as some providers seek to exit the market and create space for new operators. COVID-19 has also highlighted the increasing requirement for specialist care provision, in particular domiciliary care, and support for those living with complex needs. Local authorities have been 32 | NACFB
overwhelmed with the level of people requiring support, particularly during such a sustained period of pressure on NHS and community services. With society’s increasing awareness of the pandemic’s impact on mental health, the requirement for specialist care provision will only continue to grow. In the primary care market, we have seen a resurgence in the role of local pharmacies, which have truly emerged as vital community assets over the past 12 months. Against a challenging backdrop for the local high street, pharmacies have pivoted and expanded their amenities with the introduction of key services, including vaccination programmes. With this renewed focus on community pharmacy, and increased goodwill amongst their local customer base, pharmacies have a strong opportunity for growth and expansion. Having been forced to stop routine treatment between March and June last year, many dentists faced significant challenges and financial uncertainty connected to their NHS contract fulfilment and patient plans. Like other healthcare providers, dental surgeries needed to be reconfigured, to ensure they were COVID-secure. This meant the number of patients who could be seen was significantly reduced, allowing for the required ‘fallow time’ or cleaning to take place between each appointment. Some had utilised government schemes and invested in equipment to speed up this process, but this has taken a toll on finances. Despite these challenges, we have seen increased diversification and innovation within the sector and have supported practices to access funding by delivering additional income streams, such as phantom labs where trainees can practice and the provision of specialist dental services. Altogether, despite the enormous challenges faced, the healthcare sector has remained resilient. Combined with the innovation and forward-thinking approach of operators and business owners, the market is primed for growth as it continues to support the health and wellbeing of local communities in the months and years ahead.
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What happens next? Navigating Sunak’s Budget to stimulate long-term business recovery Josh Levy Chief Executive Officer Ultimate Finance
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overnments around the world have been using the record-low cost of debt issuance as a justification to keep business support going. There is no newly discovered magic money tree and bond markets can of course turn quickly – as Greece found out ten years ago – but, for now, cheap borrowing costs underpin a relaxed attitude to public borrowing. Policy remains rightly focused on the risks of not doing enough to first bridge through lockdown restrictions and then to support the recovery thereafter. Sunak’s positive and balanced Budget hammered home the magnitude of support given to households and businesses throughout the pandemic. Extending existing support, including the furlough scheme, until restrictions on trading are removed in the summer is both necessary and sensible. For the most impacted industries, my sense is that the support announced is positive and more than expected. Whilst there are challenges ahead with tax tightening that the Chancellor has been upfront about, the Budget sets out the first signs of a longer-term plan for recovery. An investment-led recovery is how the Chancellor has framed it and there were some very interesting measures announced. The new super-deduction for capital allowances on investment spend has the potential to significantly enhance capital expenditure and as an asset-based lender we are encouraged by this and stand ready to help support the financing of this spend. The new scheme to replace CBILS and BBLS was announced – the Recovery Loan Scheme supporting funding of up to £10 million to help businesses through the next stage of the recovery. Full details 34 | NACFB
are still to emerge, but the removal of the Business Interruption Payment highlights the focus on additionality. This is another positive – the Government cannot possibly support commercial lending in perpetuity, and this is a sensible bridge to an eventual transition away from such schemes whilst ensuring that the most impacted businesses should still have access to the liquidity they need. Focusing the strengthening of the public finances from 2023 and beyond is another sign that the Government are not looking to disrupt the recovery. The rise in corporation tax to 25% is not something that businesses will welcome but it remains competitive internationally and the small profits rate is a layer of protection for the SMEs that need it most. There have been unintended consequences from CBILS and Bounce Back loans – product distortions and competitive imbalances – and the lending market has undoubtedly been cannibalised by the abundance of unsecured cashflow and term loans. But the policy objective of supporting businesses has very much been met, even if the hangover from 2020/21 will be significantly higher levels of corporate debt in many sectors for many years to come.
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Sunak’s positive and balanced Budget hammered home the magnitude of support given to households and businesses throughout the pandemic
We now have the Government’s roadmap which is intended to give businesses the confidence to plan their path to recovery for both staffing and investment decisions and will start to deliver the economic comeback of the country. This will also require the prevention of viable businesses from failing and ensuring that they are in a financial position to grow again when restrictions are eased further.
The cash cost of reopening or ramping up trading again will be significant and access to financing is going to be key.
The protective bubble from Government support saw company insolvencies at a 31 year low in 2020. This is the impact of the loan schemes and the Government taking so many costs (tax and payroll in particular) onto their books, either temporarily or permanently.
At Ultimate Finance we remain committed to playing our part in supporting the economic recovery by working with NACFB Members to provide their clients with the funding they need to meet their business ambitions.
Liquidity remains a challenge for businesses as the transition away from these schemes begins to take effect. Funding solutions that release working capital from unpaid invoices or support investment spend will be vital for SMEs to access the cash they need in the months ahead.
Industry Insight
Under the hammer Auctioneers as a barometer for the property market Shoaib Bux Managing Director Arbuthnot Specialist Finance
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llsop, one of the largest UK auctioneers, reported in their Residential Auction Annual Review that results in the second half of 2020 surpassed that of the second half of 2019 – a remarkable fact given the wider economic uncertainty. The residential market has proven very resilient. Although viewings have been limited, agile real estate professionals quickly pivoted to virtual tours and online auctions that empowered buyers and sellers to continue with their transactions as much as possible. Throughout this, demand for residential property as an asset class remained strong. Research shows that the UK property market was on the rise over 2020, largely fuelled by the UK government’s temporary stamp duty holiday. An additional side-effect of the COVID pandemic, there has been a ‘mini-boom’ in the residential property market, especially in regions outside of London. While the London market has remained relatively on track, properties situated on commuter belts and in the regions gained popularity as buyers looked for outside space and additional rooms to accommodate a working from home lifestyle. The so-called ‘London leavers’ bought 73,950 homes outside the capital in 2020, marking the biggest exodus from London in four years. Allsop also reported an impact on shorthold tenancy investment yields. In 2019, Allsop’s Assured Shorthold Tenancy (AST) yields averaged 5.8% in London and 10.8% outside of London. In 2020 however, AST yields were 8.2% in London, compared to only 8% outside of London. As working from home becomes a part of normal working practices, we expect the increase in residential uptake to continue into 2021. We also expect shift patterns from urban to rural living to continue, with a particular focus on the commuter belt. With changes to the 36 | NACFB
pattern and schedule of office working, the need to be in a city, such as London, Manchester, or Bristol, for five days a week is no longer as strong. We expect homes with workspaces, offices, and annexes to be in high demand going forward. However, we see reasons to be cautious. The eventual end of the furlough scheme and government support, alongside the prospect of inflation, means that there are potential headwinds for the industry. There is also debate regarding the direction of house prices in 2021. Rightmove forecasts that house prices will rise by 4% in 2021, Halifax says house prices will fall by between 2% and 5% this year and the estate agents Savills and Hamptons both believe house prices will stay the same in 2021. In the final quarter of 2021, Allsop predicts improved market activity and sees prices rising again on the back of the COVID vaccine roll-out and the conclusion of Brexit. Despite a buoyant year for the UK’s property auction industry, and momentum across the broader real estate market, the direction of house prices in 2021 remains uncertain. What is clear is that the industry is resilient, agile, and ready to adapt to whatever is thrown its way.
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The eventual end of the furlough scheme and government support, alongside the prospect of inflation, means that there are potential headwinds for the industry
Commercial Mortgages
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Industry Insight
How we stepped up COVID loan schemes – one year on Bernie Skivington Director & Head of Origination & Relationship Management, Guarantee & Wholesale Solutions British Business Bank
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t the end of this month, the UK’s businesses will see the current COVID-19 business loan schemes come to an expected end after a challenging twelve months. During that time, the British Business Bank has found itself at the centre of delivering the Government’s response as it worked with the Department for Business, Energy and Industrial Strategy, HM Treasury, the banking sector, alternative lenders, and brokers to help develop and deploy a variety of schemes that provided immediate assistance to struggling businesses. Looking at the changing nature of the British Business Bank’s own figures shows the stark reality of the level of help that was needed. The British Business Bank’s core programmes were supporting nearly £8 billion of finance to almost 94,800 smaller businesses at the end of June 2020. The creation, then adoption of the COVID loan schemes, designed and rolled out at pace across the UK, has seen an additional £71 billion of loans delivered to smaller businesses across the UK since the start of the pandemic in March 2020. It means over 1.5 million businesses have now had their cashflow supported during the crisis. The schemes were designed to offer help to varying types of businesses. In designing and implementing the schemes, given 38 | NACFB
that each business had different needs, the solution could not have been a one-size fits all. For those smallest businesses struggling during the pandemic, the Bounce Back Loan Scheme has made available £44.7 billion of additional working capital to those business owners. The Coronavirus Business Interruption Loan Scheme supported 87,529 facilities with funding worth £20.8 billion. For larger businesses, unable to access the Bank of England’s Term Funding Scheme, the Coronavirus Large Business Interruption Loan Scheme (CLBILS) provided 696 facilities worth £5.1 billion. This gave businesses access to funds to pay wages, bills and suppliers and ensured they got help.
Momentary reflection Reflecting on the last year, our chief commercial officer, Patrick Magee, observes: “It’s easy to say we were operating in unprecedented times, but we truly were. The Bank recognised that it was imperative
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From the NACFB’s own figures, more than 24,500 CBILS loans have been facilitated by their Members
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The focus now has to turn to how to help businesses recover and grow as the UK looks to take the first tentative steps past the pandemic and back to a new normality
to act at pace in order to respond to the unfolding situation facing smaller businesses across the UK. That’s not to say that there weren’t bumps in the road, but the Bank has been clear on what was needed to be done to get the money out of the door through a fast accreditation process for lenders while ensuring quick responses to issues when they raised their heads.” “The focus has moved over the months from delivery to deployment and now to dialling up the focus on other issues. Fraud is something that everyone is focused on, and the Bank has been working with government, fraud prevention services, and the banking and alternative finance sectors to put in place additional measures, beyond the standard Know Your Customer and Anti-Money Laundering checks, to further mitigate fraud risks,” Patrick added.
The vital role of the intermediary Although the British Business Bank has little direct engagement with NACFB Members, many of its accredited lenders work with brokers on the origination of commercial finance, often serving businesses or sectors where access to finance might otherwise be more challenging. Given the complex business environment
and issues faced by businesses across the UK, this has meant that brokers have certainly played a significant role. From the NACFB’s own figures, more than 24,500 CBILS loans have been facilitated by their Members. The pace and quantum of deployment of loans, asset and invoice finance through these lenders is a testimony to the important role the brokers have played. The British Business Bank also values its stakeholder partnership with the NACFB, which has certainly helped to ensure a two-way flow of information, helping to ensure the brokers and Patrons have a voice while providing timely information and developments with regard to the various COVID loan schemes. As to the future, the Bank is ready for whatever comes next, but it is obvious that, if the first phase with the COVID loans was about launching at pace to help business get support, the focus now has to turn to how to help businesses recover and grow as the UK looks to take the first tentative steps past the pandemic and back to a new normality. The Bank continues to work with the Government and other key stakeholders and is already very busy preparing to respond to this next challenge. NACFB | 39
Industry Insight
Build back better Intermediaries are opening up to development opportunities Keith Litherland Business Development Manager Bridging Finance Solutions
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ith the stamp duty holiday now confirmed to be extended, strong levels of activity within the property sector are expected to remain. To meet this continued demand, the country needs more houses. For property intermediaries looking to diversify their offering beyond buy-to-let and commercial mortgages, development finance is an area rich with opportunity.
The process Some applicants may opt for a development loan rather than a conventional bridge as funds are typically released in stages or ‘tranches’, therefore, the applicant only pays interest on the actual money released rather than the overall facility. Funding for a typical house build would be spread over many months, therefore, to release all build costs on day one would be extremely costly and unnecessary for a client. On a large loan facility this methodology can save thousands in interest. We will always first look to cover 100% of the build costs net of fees and interest for any such project. Once we have covered these costs, we can look to see if we have any remaining funds that can be used towards the acquisition if required, which could account for up to 70% of the purchase price. During the application process, we gather as much information as possible to understand the project from top to bottom. We would 40 | NACFB
ask to see planning consent, drawings, details of the professional team and any contractual or warranty paperwork that goes with the build. This can seem laborious at the beginning but doing it this way ensures a smooth transition through the legal process and throughout the build programme. It also ensures we are acting responsibly as a lender and helps us make sound underwriting decisions for the benefit of the client. The process begins with an initial application plus receipt of the documentation. Following provisional underwriting, we typically arrange a site visit where possible, (if not a video meeting with the client) to fully understand what we are being asked to provide funds for. This also gives the applicant the opportunity to discuss any points or concerns they might have early in the process. Thereafter, we instruct valuation and appoint a quantity surveyor who will monitor the build as it progresses. Once these reports are back, we formally instruct solicitors who will prepare the construction documentation, ready for the initial draw down.
The next stage Moving forward, each month, the site will be visited by the surveyor. They prepare a report and sign off pre-agreed costs that have been
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To meet this continued demand, the country needs more houses
spent on site. The report is sent to the internal team and providing this broadly matches up with the build costs and schedule we have on our file; funds are typically released within 24 hours either direct to the client or contractor. We take repayment via several routes. Sale is most popular, and we are always careful to give our applicants plenty of time at the back end to allow time for sale and not leave them under pressure. Alternatively, we see traditional mortgages and buy-to-let mortgages used to repay once the units are at practical completion stage.
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The main benefit of a development loan is the staged release of funds, as this can save the applicant thousands compared to a traditional bridging loan. We will always look to pre-agree the entire facility, providing peace of mind for an applicant that regular draw downs do not require any additional underwriting or approval as the build progresses. Latterly I would also say flexibility – out of the huge number of development deals we execute, it is not uncommon for something to change midway through a build. By working closely with the applicant and their professional team from the beginning, we are keen to support the client if there is an unexpected element that nobody could have foreseen.
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Industry Insight
Maintaining connections Strengthening relationships in a virtual world Lee Rhodes Commercial Director – Asset Finance Aldermore
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taying connected with colleagues and customers over the last year has been made much more challenging due to the COVID-19 pandemic. Fortunately, technology and platforms such as Zoom, Microsoft Teams and Skype have helped make it much easier to keep in touch with people, beyond just email. To strengthen Aldermore’s relationships with brokers, and to ensure that we keep them informed on key topics such as fraud, customer due diligence and vulnerable customers, we launched our series of Aldermore Connect webinars. The webinars, which are run by Aldermore colleagues, are designed to equip brokers with expert guidance so they can back SMEs across the UK during the COVID-19 pandemic. We wanted to share our experience and expertise across a range of topics impacting asset finance brokers today, so that SMEs benefit from a seamless process in getting the funding they need. From the 22 live events so far we’ve run, we’ve covered 11 topics and reached more than 700 individuals from over 190 brokerages.
Financial crime awareness One of the most pertinent topics of the pandemic covered by our webinars was financial crime awareness. The National Audit Office has estimated that taxpayers will lose between £15-£26 billion through government support schemes such as the Bounce Back Loan Scheme (BBLS) due to fraud. The government came under intense pressure to roll out loan schemes as quickly as possible from 42 | NACFB
the outbreak of the pandemic. Similarly, Experian recorded a 181% rise in car and other asset finance fraud last year. Our webinar on the topic covered ways in which fraud can be spotted, case studies of the different types of fraud being committed and some useful tips on protecting brokers from being targeted. Another topic we’ve covered is vulnerable customers and how to identify and best support them. The current global pandemic has created more pressure on the personal and professional lives of individuals which can impact mental, physical, and financial wellbeing and it’s crucial firms look out for the signs that a customer could be vulnerable. Our webinar included tips on how our brokers can identify vulnerable customers, including using active listening, asking questions, and showing empathy. As well as topical themes, we also produced webinars on our products and our broker portal, Asset Backer. Asset Backer streamlines the process of submitting new business proposals by sending them direct to Aldermore’s credit underwriters for review, enhancing the broker experience. Previously, brokers would fill out various forms across several different platforms, whereas through Asset Backer brokers can now do this in one place. The webinar showcased the platform to brokers and gave them the opportunity to ask live questions to our experts and explore its wider functionality. As well as keeping brokers informed on COVID-19 related issues, the webinar series has given the opportunity for my colleagues who work in functions which are not broker facing, to engage with our brokers. They’ve been able to share their expertise through what is a challenging period and strengthen the relationship between Aldermore and our brokers. We’ve received lots of positive feedback from the webinar series already and we plan to cover more topics in the future.
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Industry Insight
It takes both sides to build a bridge Collaboration unlocks a brighter future for our lending dynamic Matt Phillips Head of Broker & Strategic Partnerships White Oak
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021 has already delivered challenges thick and fast. The national lockdown and workforces remaining at home have put a pause on some SME’s plans to steady the ship and move forward towards growth. This has resulted in the current government-backed schemes being extended until the end of this month. We are at a crucial point when it comes to how we approach our finances, which might be daunting for SMEs, but the broker community are playing a key role in helping businesses navigate their options and seize opportunities to drive growth. The vaccine rollout is offering a sense of hope to the business community and as a funder we are committed to helping brokers tackle any shifts in the lending landscape, giving them more support than ever before.
CBILS and government support The COVID-19 pandemic has redefined what ‘normal’ is for many of us, and although many hope that we are edging closer to a return to some form of normality, we still cannot be sure what this will look like and what it will mean for different sectors and businesses. Our role as funders is to work closely with brokers and be on hand to help businesses as they navigate this new normal, whatever it may look like. 44 | NACFB
The government-backed schemes, such as the Coronavirus Business Interruption Loan Scheme (CBILS), have been a feature of the pandemic so far and provided vital support to SMEs up and down the country. With the deadline for applications rapidly approaching, we will see a change in what products are available, but it is a situation that is difficult to predict which presents challenges. As funders begin to offer new products, it will be important for businesses to understand the options available to them and the role of the new government-backed scheme, as well as those traditional lending offerings. It is vital that brokers collaborate with funders to maintain an understanding of this everchanging world, as regardless of what the future holds, we know that the post-CBILS world will not be like pre-CBILS. The added uncertainty of Brexit means that there is an impetus on businesses to have clear advice on the options available to them.
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Regardless of what the future holds, we know that the post-CBILS world will not be like pre-CBILS
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Brokers are now expected to be ahead of the curve, to be aware of the different changes taking place and the range of products on offer across lenders
Treading water vs moving forward As a community we must be aware of, and be prepared for, a range of possibilities. The latter half of 2021 will be pivotal for SMEs with increased trade, new funding options, supply chain changes and more. It remains to be seen exactly what the outlook will be for businesses in the spring and beyond and brokers must be ready to mobilise lending support for their clients. We have now received clarity on what the lending landscape will look like beyond the end of March, and it is clear an agile and informed approach will still be needed. Speed is vital for lenders as brokers cannot wait to hear on lending decisions which will be crucial for client businesses moving forwards. Brokers are now expected to be ahead of the curve, to be aware of the different changes taking place and the range of products on offer across lenders. No longer is it acceptable to stand still and stick with what you know. Now, if a business needs a financial solution then a broker must be prepared to act fast. It is important for us all to be able to adapt – lenders, brokers, and
businesses alike. By supporting businesses with the right product range, we will be able to move forwards together, towards growth, and continue supporting the SME community, which is the most vital part of our economy.
Opportunities lie ahead With changes and challenges, there is always opportunity. It’s vital that we keep looking towards these opportunities, and that we plan accordingly. COVID-19 has transformed how brokers and funders work together and finance growth. Through close collaboration and communication, funders and brokers have supported businesses, and we have already risen to the challenges posed by the pandemic. Whether its further government-backed support or a return to more ‘business as usual’ products, the focus will be on growth and we are ready to work with brokers to deliver that growth for SMEs. As a funder, we will continue to provide this support to the broker community and its customers, through communication and through flexibility, adapting to the challenges that 2021 will bring, and driving growth as we navigate this change together. NACFB | 45
Broker Voice
Powered by people Why technology platforms still need hand-holding
Paul McPherson Director JPM Capital Finance
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am keen to reflect on the role of technology in a modern finance brokerage and answer the question, can one really exist without the other?
Our brokerage recently acquired the up-and-coming fintech platform SME Loans. We view this acquisition as a marriage of an established sales brokerage, with a technology driven lead generation system.
Data driven results Let us go back to February 2020, when seemingly, everything was going well. Our finance brokerage was profitable and growing. We relied almost exclusively on relationship building, word of mouth and direct sales. We have a website of course, but very little organic growth generated outside of our typical relationships. The one thing that the original lockdown gave us was time. Time to reflect on the rigidity of our business and our adaptability to external market forces. To be honest, we suffered because we were unable to cast our net as wide as it needed to be during the most trying of times. We also found that traditional methods of customer contact such as cold calling had become outdated. The introduction of GDPR had also stifled our ability to grow exponentially through more traditional email marketing campaigns. We found that like most things in life, potential clients were craving an easy and practical solution to their needs. The platform is a full stack digital experience with a focus not only on generating traffic through the website, but then converting that traffic into making a commitment with funding enquiries. To do
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The role is as complex as ever, with so many different products available and so much uncertainty in the market leading to harsher lending conditions
this, we utilised a variety of technical and analytical tools including natural language processing and automated intelligent content generation for users. The affiliate programme allows clients to benefit not only from funding solutions, but automated prompting towards carefully selected and appropriate lenders dependent on their needs. There is a full-time SEO team, content team and CRO (Conversion Rate Optimiser) who have combined in less than two years to build a platform which has already achieved a lot and created a reputation which led to multiple industry parties vying to take over the next stage of its development. For context, the platform was generating nearly 20,000 impressions and around 1,000 loan enquiries each month.
Confidence in value However, this kind of platform comes with its own difficulties. Without a direct sales operation the leads were not converting at anywhere near the level they needed to. Some of the traffic was not as targeted as it could be without the support of a sales team advising the specialists what industries to target, or products to promote. The team quickly began to understand this and realised that it would take years to build the level of sales experience that is needed to take customers through the application process and recommend the correct solution to each problem. In short, the technology was failing without the human touch of experienced finance brokers. As a traditional broker, we aim to add value to the proposition by helping the team use their tools to promote the right services and attract the correct customers. The established sales team still provides a personal and experienced traditional broker service. Customer feedback has improved as we realise the need for our sales team to take each customer on a journey through the application process and understand fully the options that are available for each unique circumstance. On reflection, we believe the role of the broker is as important as ever. Attracting customers remains important and leaning on technology to do so is now vital. But the role is as complex as ever, with so many different products available and so much uncertainty in the market leading to harsher lending conditions. Brokers are not luddites. We are not afraid of technology replacing us, because we all know that what we are doing adds tangible value to the client. Our aim should be to find new ways to enhance and complement our existing processes, because we know these processes work. We are excited to continue developing our brand, utilising the technology and lend our experience as we work towards establishing ourselves. The lesson I would offer to brokers seeking to explore a similar route is not to throw the baby out with the bathwater, have pride and confidence in the value we add and marry that to technological advances. NACFB | 47
Opinion
Looking beyond the first loan Pragmatism not idealism Gerard Morgan Jackson Head of Structured Finance United Trust Bank
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t’s no surprise that worries about the longer-term impact of the pandemic are contributing to a feeling of instability and uncertainty enveloping many sectors of UK business. The fall-out of Brexit is still a great unknown as well. As a result, many brokers and their clients have experienced lenders retreating from the market to wait and see what happens. UTB adopted a different stance throughout last year and we took a conscious decision to continue lending. Our investment in technology and the tenacity of our staff enabled us to not only carry on but to grow. Our commitment to continue supporting developers, investors, SMEs, and the UK economy was our motivation. As a result, UTB lent a record amount last year, in excess of £1 billion of new originations, and the Bank’s structured finance division played a significant role in that achievement. Although a lot of our business is repeat business, offered to longstanding customers with whom we have established strong and trusted relationships, we also receive a lot of enquiries from customers new to the Bank who have been turned away or let down elsewhere. UTB remains a pragmatic lender. We set up the structured finance department four years ago with a brief to look at every proposal entirely on its own merits and since then, as a division we have completed more than £600 million of structured loans. Our size is an advantage. It allows us to be nimble and adaptable to change, an essential skill in the current environment. 48 | NACFB
Our innovative approach to deal structuring means we often provide funding solutions that go far beyond the client’s initial need, funding not only the immediate requirement, but then moving on to several separate, or one global facility, which meets all the client’s property funding needs. This often allows them the time, liquidity, and flexibility to build their business today and into the future. We think of ourselves as silent partners in our client’s businesses, always on hand to assist wherever we can. We therefore approach proposals not on a transactional basis but on a relationship basis. Our extremely high retention rate confirms how greatly our customers value this approach. At UTB we understand that structured finance clients, by their very nature, tend to be more adventurous and sophisticated than most, and will therefore present lenders with more challenging and complex deals. However, we also recognise that these people have the ability to see opportunities when others see only threats. Our mission for 2021 and beyond is to enable these investors, developers, and entrepreneurs to keep turning their visions into realities.
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Many brokers and their clients have experienced lenders retreating from the market to wait and see what happens
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Opinion
It ain’t what you do, it’s the way that you do it Technology to help you survive and thrive Paul Pitman Managing Director Collier Pickard
by Beagle Research in the USA, found sellers were frustrated by the time-consuming, manual, and unintegrated elements of their jobs. The research highlighted their five top complaints:
1. Doing repetitive administrative tasks that could be automated.
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ockdowns, furloughs, and home working. All impacting how businesses perceive their professional relationships. Now, when clients engage, they are comparing you not just with other brokers, but with every other supplier. In order to beat the competition, you need to be able to differentiate yourself in a market geared to transparency and consistency. How you do that could be the difference between success and failure. Before we go much further, a bit of background. Despite heading up one of the UK’s leading independent CRM consultancies, I am not here to deliver another thinly veiled sales pitch for some Customer Relationship Management (CRM) system. Let’s face it, most of you will have already invested in something to store client and prospect data. My starting point is that a functioning CRM system is no longer a sufficient differentiator to justify further investment. What I hope to show is that unless you know how to use data to improve the service you provide, then you will not be able to deliver the differentiation that clients increasingly demand.
Stop collecting data, start using it For too long we have seen brokers collecting client data for storage in CRM databases (or spreadsheets). A report for Oracle conducted 50 | NACFB
2. Updating multiple systems that ought to be connected. 3. Following up with a prospect they know isn’t interested. 4. Re-entering email data into a CRM.
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5. Entering notes into a CRM.
Unless you know how to use data to improve the service you provide, then you will not be able to deliver the differentiation that clients increasingly demand
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Understanding the client buying process, as opposed to your sales process, will allow you to identify those points where you can lead with your differentiators
Yet when they asked those same sellers what systems they needed to use – CRM wasn’t in the top five. The challenge is clear, what is needed is a focus on using client data to improve outcomes, not data collection for collection’s sake.
have morphed into price comparison sites where the client is responsible for their own data entry, can manage their own results and price is the only differentiator. In this space the winners are those with access to the best data scientists.
Scalable, repeatable processes drive modern business growth
If you cannot see a way of providing your clients with anything of sufficient value to overcome price as an objection, then invest in CRM tools with Artificial Intelligence (AI) tools to drive growth.
If you want to make data work for your business, you need processes that act on your data to produce a result. The technology that combines processes and data to better manage client relationships is CRM. So, if your CRM system isn’t delivering improved outcomes for your clients, it might be time to ask why? When looking at what you should change, try not to confuse ‘mandated’ and ‘differentiated’ processes. A mandated process is one that must be followed. Examples might include processes around KYC and AML rules. With mandated processes it makes sense to work with a CRM tool that can demonstrate pre-built compliance with these rules, then adapt your business to fit their system. These systems provide the functionality that your clients expect, and the law demands but they do not give the client any reason to buy from you because your competitors will have them as well. Known as ‘me too’ functionality, in highly regulated markets which are governed by centrally imposed rules, these systems
If on the other hand, you and your clients see value in long-term professional relationships, then differentiated processes provide a way of scaling your business. Identifying how your client buys, and why they bought from you is a great start. Understanding the client buying process, as opposed to your sales process, will allow you to identify those points where you can lead with your differentiators. Armed with this understanding you can ensure that the data you hold on clients and their needs, is empowering your sellers to take the right offer at the right time to the right person, and to win more, and better business. Back to my area of expertise – CRM systems. The challenge we see most often, is that some CRM suppliers focus on mandated processes, and some provide tools for you to build your own differentiated processes. The good news is that by defining your strategy as either a low-cost provider, or a differentiator, you can identify the right implementation partner. NACFB | 51
Opinion
Keeping the market moving There are many ways to move forward, but only one way to stand still Romualdas Scepkauskas Analyst KSEYE
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020 was a turbulent year for both the UK economy and the property market. In the face of the pandemic, the key challenge was to keep the market moving. With lockdowns causing business friction for both lenders and property investors, it was of vital importance to react quickly to changing circumstances. As a short-term property lender that has continued to lend (largely uninterrupted) throughout the pandemic, we firmly believe that property finance brokers have played a key role in helping businesses to not only navigate through the pandemic, but also to achieve and sustain growth in its midst. Following the announcement of the SDLT holiday last July, there was a sharp increase in demand for UK residential properties. Brokers played an instrumental role in catering for this demand by connecting property investors to the right lenders, sourcing the best possible finance solutions. In conjunction with CBILS, and other similar schemes, brokers have successfully helped businesses that have been impacted by COVID-19 by connecting them to the most suitable accredited lenders. Following our own accreditation for term lending under CBILS, we have received an encouragingly high number of applications, which we attribute largely to our extensive broker network. Not only that, but we also continue to find that working with brokers makes for a much smoother and quicker lending process – both in relation to our CBILS lending, as well as our non-CBILS lending. Notwithstanding the various schemes and incentives, the commercial property sector has taken a heavy hit because of the pandemic. 52 | NACFB
Whether it be an owner-occupied restaurant or a property SME managing an office or retail space, there remains a desperate need for appropriate finance solutions to support these businesses. We hope to see brokers and lenders working with these businesses to find suitable refinancing or restructuring options. With recent changes in planning legislation for commercial use classes, we expect to see the sector stabilise further. We are already seeing the resilient and adaptive nature of our borrowers, with an uplift in commercial property purchases driven by the intention of converting properties to other uses, including residential use. Proactive communication between lenders and brokers has never been more important, especially in the fast-paced bridging sector. With considerable disruption caused by the pandemic, a clear path of communication is more crucial than ever when working with tight deadlines and evolving situations. Brokers are vital in the process of bringing deals forward to completion; from clearly communicating the initial enquiry to the lender, chasing the required documentation from the borrower, or liaising with lenders and lawyers to overcome complex issues that arise. Even in the most successful operations, there is always room for collaborative improvement – we welcome feedback from brokers on how we can improve our processes and make the lending alliance more effective.
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With recent changes in planning legislation for commercial use classes, we expect to see the sector stabilise further
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Opinion
The future is open Demystifying Open Banking Kevin Vendel Head of Sales FIBR
For example, with the help of Open Banking data, we were able to finance a restaurant, allowing them to grow their delivery capabilities during the height of lockdown.
The intermediary shift
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ll the introducers that work with us know that we mention the term Open Banking a lot, in calls, emails, on our indicative quotes, you name it. But I noticed nobody really talks about it in relation to you guys, the introducers. So, it is time to deep dive into the world of Open Banking, or in other words, it is time to demystify the term Open Banking. Our mission is to provide SMEs with best-in-class financial services that help them fulfil their ambitions. We know SMEs are in a hurry – we want to make sure we deliver our services in a way that is fast and easy and offers great value to customers and partners alike. We do this through data and technology – this is where Open Banking comes in. Open Banking has been around for three years now, officially enforced from January 2018, the idea of it started in 2015. The goal was, and still is, to increase opportunities for fintechs and encourage non-banking providers to participate; increasing transparency, choice, and security for consumers and businesses. The underlying view from the regulator is that banking data belongs to the customer, not the bank, and they should be free to choose who can have access to it if it gives them a better choice of financial products. Put simply, Open Banking ensures that we have the most up to date view of the business, which is especially important during the pandemic. It has allowed us to lend into out of favour industries. 54 | NACFB
Between 2018 and 2021, there has been a big shift within the introducer community to adopting Open Banking. However, there is still some confusion as to how it can benefit the client. Often I get asked, what is Open Banking? Why does it benefit me? Are you stealing bank statements? How does it benefit my client? I do not think my clients trust it or can you help me explain it to my clients? Let us start with clearing up what Open Banking is and what it does. Basically, it is an ‘invisible link’ also called an API (Application Programming Interface) between the bank and a third-party, which in our industry is the lender. It allows a business lender
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The underlying view from the regulator is that banking data belongs to the customer, not the bank
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With Open Banking you eliminate the need to chase clients for these statements. And in addition, the direct data can cut underwriting time down from hours to minutes
to access your clients’ transactional information in a secure and safe way enabling a more accurate risk assessment to be conducted and removing the risk of fraud. This ultimately results in more affordable pricing for the clients and a better application experience. For the broker, the better pricing should result in increased conversions and the reduced hassle of having to obtain bank statements. Basically, it solves a lot of problems for all parties involved.
A slow uptake Despite the clear benefits for all parties involved, business Open Banking adoption has not seen the same rapid uptake as the consumer space. This is partly to do with the knowledge gap of the clients, and in some cases, the introducers. Unfortunately, in my experience, talking to a lot of introducers, a lot of assumptions come from hearsay, which sometimes creates misconceptions, especially regarding security. The reality is Open Banking is by far the most secure way to share sensitive transactional data. The entire industry is underpinned by technology “gatekeepers” such as Truelayer, Plaid, Tink, Bud, Yapily and others. These companies provide the technology layer to securely transfer data between bank and lender without ever having access to the data themselves. The problem is that not every provider has access to the same banks, which can be
frustrating for you as an introducer. The best advice I can give you is to always ask the lender you work with to provide you with a list of banks they support with Open Banking. How many times have you tried to obtain a bank statement and been met with delays and incomplete data? And then how long has it taken your lender to analyse and to manually go through all those PDF statements? As our team speaks to hundreds of brokers, I can tell you that happens often. In summary Open Banking is here to stay. The pandemic has dramatically accelerated the need for live data sources to enable fair, more accurate risk profiling. For you, as the brokers, we expect to see increased adoption, removing the need for you to chase bank statements and ultimately allowing you to give your clients a quicker decision. I am extremely excited to see where 2021 and the coming years go regarding technology, and how both brokers and lenders put this new technology to use. Business lending has developed a lot over the last ten years, and we believe that Open Banking will be the catalyst for the development of new and innovative financial products in the near future. If you’re seeking a pandemic distraction and want to learn more exciting stuff about Open Banking and FIBR, message me via LinkedIn. NACFB | 55
Listicle
ways to make your business more accessible
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he pandemic has changed the way we live our lives. With remote working and the use of digital technologies at the fore, now might be a good time to review how accessible your business is to people with disabilities. It may surprise you to learn that this cohort represents more than a fifth (21%) of the entire UK population and no doubt, some of them may need to access commercial finance in 2021. We’ve assembled five tips to help you improve inclusivity.
2. Actively welcome disabled people If a customer has chosen to share with you that they have a disability, listen carefully to any specific requirements they may have as this could help not only them but others down the line. When appropriate, ask questions to check that your products and services are accessible, respond in a way that shows you care and where possible make the necessary changes.
Don’t shy away from complying with the law, embrace it, particularly in relation to digital services which, since the start of the pandemic, are more important than ever. Your website, should, as a minimum, meet level AA of the Web Content Accessibility Guidelines (WCAG 2.1). This might mean making changes to text, images and sounds, or the code which defines the website’s structure and presentation. Your website should also work on the most commonly used assistive technologies including screen magnifiers, screen readers and speech recognition tools. You should also publish a statement which explains the measures you have taken to make your website accessible.
1. Make reasonable adjustments Disabled people have the right to ‘reasonable adjustments’ that make jobs and services accessible to them. We often think of adjustments as physical such as grab rails, ramps, hearing loops. However, they can also relate to behaviour; for example, if someone has a hearing impairment make sure you are facing them when speaking and making sure your hands are not in front of your mouth, so that so that they can lipread – if that’s their preference. The definition of ‘reasonable’ is purposefully not set in law. Instead, it depends on what the person needs, the situation and the cost. A service provider must consider all requests for adjustment and if they believe it is too expensive or disruptive to be ‘reasonable’, they need to be able to demonstrate why.
5. Train yourself and your team
3. Include people with disabilities in your marketing Representation is important so let people with disabilities know that they are welcome by featuring them in your marketing materials such as case studies and imagery, both on your website and in brochures.
56 | NACFB
4. Embrace legal requirements
To improve interactions, invest in training on how to provide customer service to people with disabilities across multiple channels. It’s important to know what to do when a person has difficulties using your service. There are lots of training providers out there but you could start with the online courses included in your NACFB membership including Equality and Diversity in the Workplace, Equality and Diversity for Managers, and Fair Treatment of Vulnerable Customers.
Bridging Finance From refurbishment to refinance, help your clients take advantage of investment opportunities with our award-winning specialist Bridging offering. Rates from 0.50% pcm Loans from £50k to £15m Terms up to 24 months No ERCs or minimum interest Heavy refurbishment options are also available
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0330 123 4521 cm.broker@shawbrook.co.uk property.shawbrook.co.uk
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Five Minutes With
Five minutes with: Louise Preen Louise Preen Business Development Executive Merchant Money Describe your role in ten words or less? Assist brokers with providing suitable funding solutions for SMEs.
In your view what are the key elements to a successful deal? An application that is packaged well i.e. is rich and transparent in information on the business’ activities, requirements and performance. Also, the lender having insight and understanding of the business they are looking to assist.
What’s the most common reason for turning away a deal? When it is not in the best interest of the business to take on additional debt because of affordability concerns.
If you were to start your own small business, what would it sell?
knowing that businesses are getting the assistance they need during these unprecedented times.
What is your favourite SME success story?
If you can’t measure it you can’t manage it, metrics are imperative. As a leader it’s also important to be transparent, and to be firm, but always fair.
Personally, I have a friend who left an office-based job to fulfill her long-time dream of owning a restaurant. She now has three incredibly successful restaurants.
What law would you pass if you were Prime Minister for the day?
What advice do you have for the modern commercial finance broker? Understand your client’s needs and be empowered to provide the best solution for them and their business. Serve the customer’s ambitious growth.
Who do you admire most and why?
I would own a rock-climbing gym.
What recent professional accomplishment are you most proud of? Each time a customer is assisted with a CBILS facility from us, I feel proud 58 | NACFB
What is your favourite piece of management/leadership advice?
My grandmother. She is the matriarch of our family. She’s been an entrepreneur, a teacher, a mother, a seasoned world traveller with many adventure stories. She leaves an impression on everyone that she meets. She is authentic, bold and will share a gin and a laugh with you!
Being a big animal lover, I would want more funding to go to animal charities.
What changes do you hope to see in the new normal? I hope to see people actively enjoying things they previously took for granted; sharing a meal with a loved one for example, or celebrating achievements with friends. I hope the world looks kinder and more tolerant.
What’s happening now, that in 20 years people will look back on and laugh about? The amount of paper we used to print out, everything will be digitised by then.
BRIDGING FINANCE
Bridging Finance made simple If your customers need a short-term solution for their financial goals, our tailored range of bridging loans could provide the answers they need. Here’s how we could help: Regulated and non-regulated loans Rates from 0.49% Standard and light refurbishment products included Up to 65% LTV Wider choice of property types accepted including HMOs and New Builds
FOR INTERMEDIARY USE ONLY.
precisemortgages.co.uk
Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales (company number 06749498). Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.
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Housing Accelerator Fund
Loan to GDV up to 70% | Loans from £1m to £10m Targeted to increase supply in areas where housing is least affordable
WORKING TOGETHER A five-year alliance between Homes England and United Trust Bank to improve financial support for the building activities of small and medium sized housebuilders and developers.
T: 020 7190 5555 E: development@utbank.co.uk www.utbank.co.uk/lending/housing-accelerator-fund
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