Commercial Broker (NACFB Magazine) July/August 2019

Issue 72

Broker

JULY/AUGUST 2019

COMMERCIAL

The magazine for the National Association of Commercial Finance Brokers

20 MANAGEMENT ACCOUNTABILITY Efforts to strengthen market integrity through SM&CR

34 RACE TO THE BOTTOM? Loan spreading and the reputational risk for brokers

#CFE2019 50 things we learned from 2019’s record-breaking NACFB Expo

40 MAINTAINING BUSINESS CONFIDENCE Strengthening the trust between SMEs and banks

42 NO STONE UNTURNED Association invites independent auditors to review practices

Contents

In this July/August issue NACFB News

Special Features

4 6 8 10-11 12-14

24-25 27-32

Note from Graham Toy Updates from the Association Lloyds: The irreplaceable BDM Industry news round-up Patron news

34-35

36 38-39

Praetura: The story so far…

NACFB: 50 things we learned at #CFE2019 Catalyst Business Finance: Risky loan spreading Lloyds: Empowering the broker Hope Capital: Securing positive client outcomes

Industry Insight 40-41

42-43

SME Alliance: Rebuilding trust and faith Rockstead Group: The NACFB’s clean bill of health

Opinion & Commentary

34 Case Study 16

Oblix Capital: Repurposing a warehouse

Patron Profile 18-19

Bloomsmith: A return to VAT funding

44-45

46

48-49

50

52-53

54

Tower Leasing: We’re here to stay InterBay Commercial: Mitigating portfolio risk Ultimate Finance: Leadership is evolving Precise Mortgages: The best thing since sliced loans Octopus Property: Ten obstacles to a successful deal Five minutes with: Jennifer Enright, Deputy Head – Customer Experience – Hitachi Capital Business Finance

50 Further Information KIERAN JONES Communications Manager & Editor

33 Eastcheap | London | EC3M 1DT Kieran.Jones@nacfb.org.uk LAURA MILLS Magazine Production Assistant

33 Eastcheap | London | EC3M 1DT Laura.Mills@nacfb.org.uk RUTH DUNN Magazine Advertising T 0845 0043169

Compliance Update 20-21 The Senior Managers

Magazine@nacfb.org.uk

Ask the Expert

MACKMAN Design & Production T 01787 388038

22

and Certification Regime

David Hunter: A website that works for you

40

mackman.co.uk

NACFB | 3

Welcome

Graham’s Note

A

s you read the latest edition of our Commercial Broker magazine, I hope it finds you basking in the warmth of a long hot summer, which may engender a slower pace allowing us all time to reflect on the first half of the year, as well as what might be over the horizon.

In this issue you will be able to read our report on the NACFB Expo which has always presented a multitude of opportunities, whether attending as a lender or broker and I am delighted that our tenth event surpassed our aspirations to grow this, our flagship event.

I am sure that there are many of you who have been attending our show since its inception and, as an indication of the growth that has been achieved, I was reminded that the very first show guide was a mere 28 pages compared to this year’s which weighed in at 96 pages.

Graham Toy CEO | NACFB

It is unfair to all our Expo panellists to call out one particular item in the conference theatre, but I was particularly drawn to the conversation with Adrian Dixon which reviewed a number of topical issues in the arena of compliance and the likely direction of travel by the FCA. Building on this, it is interesting to reflect on the number of times that the phrase operational resilience occurs in conversations.

All this does is emphasise the importance of running our respective businesses in the most professional and compliant way.

Many of you will have seen the launch of our Senior Managers and Certification Regime hub which is designed to take our Members on a step-by-step journey through these regulations. This is just one example of how we are seeking to demystify new rules and continue to be the trusted source of compliance knowledge, so that our Members can focus on helping their clients.

4 | NACFB

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NACFB News

Association updates for July/August 2019

NACFB news round-up NACFB membership reaches record levels with more than 1800 brokers

NACFB Industry Awards 2019 – deadline for Patron submissions extended

The last twelve-months has seen the number of NACFB Member firms increase significantly and, for the first time in our twenty-seven-year history, the Association now works with the direct support of 1014 commercial finance broking firms – a 20% increase on this time last year.

The deadline for submissions for this year’s NACFB industry awards has been extended to 5pm on Friday 16th August.

After accounting for Registered Individuals (RIs), the Association has now passed over 1800 individual brokers proudly operating their brokerage under the NACFB logo – a record for the Association.

The NACFB has grown by an extra 95 membership firms in 2019 alone, ensuring that we remain by far the largest independent – and not-for-profit – trade body dedicated solely to the modern commercial finance professional.

The news comes one month after the NACFB staged its largest ever Commercial Finance Expo. The flagship event saw more than 1700 delegates join 138 exhibitors for a record-breaking day. You can find out more in our review on p.27 of this month’s issue.

Graham Toy, NACFB CEO, said: “Our growth in 2019 demonstrates the willingness of commercial finance brokers and lenders to achieve the highest professional standards and to proudly display the NACFB kitemark as validation of these standards to SMEs. “The challenging goal for our Association is to work with a largerthan ever membership to provide for all their regulatory needs.”

Ann Walsh, the NACFB’s Business Development Manager, spoke of the Association’s continued growth: “I work alongside each and every new Member and I have been heartened to see an increase in the quality, scope and diversity of the brokerages coming through.

We uphold the highest standards of membership criteria and we will continue to partner with new brokerages in helping them to meet those expectations.”

6 | NACFB

This year’s NACFB Gala Dinner & Awards ceremony will take place on the evening of Thursday 28th November 2019 and is open to award submissions from all lender Patrons of the Association.

Once submissions have been received, a panel of NACFB brokers will produce a shortlist from which the entire membership will submit their vote for the winner. All shortlisted lenders will be notified in September 2019.

This year, the following categories are open for submission: • • • • • • • • • • • • •

Development Lender of the Year Business Bank of the Year Buy to Let Lender of the Year Commercial Mortgage Lender of the Year Factor & Invoice Discounter of the Year Hard Asset Provider of the Year Soft Asset Provider of the Year Motor Finance Provider of the Year Most Innovative Lender of the Year Short Term Lender of the Year Specialist Lender of the Year Unsecured Lender of the Year Rising Star of the Year

A lender Patron may be entered into more than one category, but each entry must be accompanied by an entry form. There is no limit to the number of entries one Patron can make.

Download submission forms, enter for consideration and reserve a table at this year’s NACFB Gala Dinner & Awards ceremony at: nacfbgaladinner.co.uk

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Note from our Sponsor

Nothing can replace a great BDM Working in partnership with commercial finance brokers is a key part of our strategy to support the growth of UK SME businesses

Andy Bishop National Director of Business Development SME Banking Lloyds Bank

W

ith more than £1 billion of committed term lending, 36% growth in Asset Finance lending and 45% growth in Invoice Finance clients in 2018 through the broker channel, I recognise the vital part that you play in helping your clients access the right finance and banking relationship for their business.

That’s why at Lloyds Bank we have a highly experienced national team of dedicated Business Development Managers (BDMs), many with sector specialisms who work closely with brokers to assess client needs, shape and personally deliver committed lending solutions. Our BDMs work hand in hand with the broker and the client to ensure the smooth completion of each deal, supported by a network of local and specialist relationship teams. In addition, the BDMs facilitate introductions to dedicated broker teams for Invoice and Asset Finance solutions.

Our regular broker satisfaction surveys and broker research earlier this year highlight the importance that brokers place on the BDM having personal accountability, not just for their relationship with us, but also for delivering personally for the client. It’s what sets Lloyds Bank apart.

As brokers increase the size and breadth of businesses they deal 8 | NACFB

with and we see changes in the way that clients access and secure finance through technology, I understand that there is uncertainty in the broker community about the future. We are working to develop digital broker accessibility, but I strongly believe that the successful funders will be those who can provide an omni-channel experience for their brokers – in short a quality BDM is irreplaceable as the size of a deal is not reflective of the importance of that deal to the client.

Over the next few months we will be significantly increasing the number of dedicated BDMs working with our brokers to support their clients, whatever the size of that client, to ensure that every deal has that personal touch. Feedback from our brokers who took part in our recent pilot was very strong with 70% of brokers saying that having a BDM to work with on every deal would mean that they will generate more business in the future. This is a significant investment reflecting our desire to increase support to brokers and help them to grow their own businesses.

Equally we are planning several digital developments, initially for Asset Finance, which will enhance both the client journey and broker experience freeing up time for BDMs to spend with their brokers building stronger and mutually beneficial relationships.

Our goal is to be the best bank for your clients. We’ll invest time collaborating with you to understand their business and commit to building a strong banking relationship focussed on helping them achieve their goals. If you would like to join the Lloyds Bank panel, please contact one of our BDMs by visiting Lloydsbank.com/ businessintermediaries

Gala

Dinner & Industry Awards 2019 Park Plaza Westminster Bridge, 200 Westminster Bridge Road, London, SE1 7UT

November

28

Drinks reception starts at 18:30 Guests to be seated at 19:00 After party to follow

Celebrating the success of collaboration Entry for award submissions is now open to NACFB Patrons View this year’s categories and secure your place at:

nacfbgaladinner.co.uk Sponsored by

Industry News

Industry News 3. Banks reject 70% of small businesses A report from Smith & Williamson reveals that 70% of small businesses fail to secure finance at the first attempt while two in five companies said that they had been turned down for funding more than three times. One in ten had made five or more unsuccessful attempts and nearly half said weak management was the reason given for the refusal. Inadequate business models and poor financial controls were also key reasons for losing out.

1 1. UK manufacturing sector larger than official figures suggest Britain’s manufacturing sector is much larger than official figures suggest, according to a report by Cambridge University for the Department for Business, Energy and Industrial Strategy (BEIS). Official statistics estimate that manufacturing output accounts for 9% of national income, but the report found the proportion of GDP accounted for by the sector was nearer 15% once activities tied to sales of UK products were included.

4. MPs call for action to protect bank victims The co-chair of the All-Party Parliamentary Group on Fair Business Banking (APPG) has called on regulators to protect Britain’s consumers and small businesses by banning the sale of debt to unregulated and inactive lenders. Kevin Hollinrake MP has called for the creation of a new tribunal to protect SMEs who have disputes with major banks or other financial services firms.

5 5. Asset finance market grows in April According to figures from the Finance & Leasing Association (FLA), asset finance new business grew by 7% in April, compared with the same month last year. The data showed that new business in the plant and machinery finance and business equipment finance sectors rose by 8% and 9% respectively, while commercial vehicles finance new business was up 23% over the same period.

6. SMEs struggle to stay on top of finances Research from Funding Options suggests almost three million SMEs are struggling to cope with their finances. Some 51% of small firms want help while 23% have no idea if they are going to go into the red until it happens, the finance group found.

Only half of SMEs carry out regular forecasts to help them keep track of their cash flow, while 17% said that they do not carry out formal reviews of their business finance at all.

2. Increase in high-LTV lending

7. FSB: 45% of small firms expect growth this year

New data from the Bank of England shows that 4.5% of mortgages had LTV ratios over 90% in the first quarter of 2019 – above the 3.3% share seen a year ago to reach the highest level since Q2 2017. The statistics, from the BoE’s Mortgage Lenders and Administrators Return, also show that the proportion of high loan to income lending was 45% in Q1, 0.8 percentage points higher than a year earlier.

A record low number of small businesses are expecting to grow over the next 12 months, according to the Federation of Small Businesses (FSB), with just 45% saying they are likely to see expansion in the coming year. The FSB’s quarterly confidence index measure, which is based on a survey of 982 companies, stood at -8.8 in Q2, with this down 22 points on a year ago and marking the fourth consecutive negative reading.

10 | NACFB

4

8. SME owners concerned about corporate competition

10. UKEF announces financial support packages for SME exporters

Research by Menzies LLP has revealed that two-thirds (65%) of SME owners are concerned that multinationals and other large corporates “have too much say” over the future viability of their business.

Some 28% of SME owners said they are intending to boost their own competitiveness by cutting costs and raising finance to re-invest in their business, while a further 15% are looking for ways to spread risk.

UK Export Finance is launching a financial support package for SME exporters, that will include the Small Deals Initiative, guaranteeing the loans of potential overseas buyers of British goods, so as to make UK bids more competitive. It also extends financial support to firms in exporters’ supply chains as well as exporters themselves and, through the General Export Facility, will cover general costs for exporters, rather than just costs related to a specific export deal.

9. HMRC increasingly holding finance directors to account

8

The number of senior finance directors fined

by HMRC for accounting failings rose from 46 individuals in 2012-13 to 125 in 2017-18.

The figure for the year to 31 March hit 152 – an increase of 22%. Senior accounting officers can be fined up to £5,000 if they fail to properly account for their business’ income and expenditure for tax purposes.

10

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NACFB | 11

Patron News

Patron News iwoca

United Trust Bank

iwoca: Government scheme to help small businesses ‘at risk of failure’

UTB: Four out of five brokers undeterred

by Brexit uncertainty

Christoph Rieche, CEO of NACFB Patron iwoca, has written to the former UK Chancellor warning that a government scheme to help small businesses access funding is at risk of failure.

A ‘Broker Sentiment Poll’ from United Trust Bank has revealed that four out of five brokers (81%) are pursuing their plans for their businesses regardless of what happens with Brexit.

Rieche wrote to the Chancellor Philip Hammond calling for a new task force to help repair the flagging Bank Referral Scheme.

However, 1 in 10 (9%) are putting plans on hold until the nature of Brexit is much clearer and a further 8% are pursuing a more conservative plan due to Brexit uncertainty. Just 2% are implementing more aggressive growth plans, the NACFB Patron revealed.

The Bank Referral Scheme (BRS) was set up in November 2016 to help SMEs to loans and other financing. It came in response to a decline in lending to smaller businesses after the 2008 financial crisis.

Under the scheme, a bank that rejects an SME loan application must refer the business to an online platform. These platforms connect the business to Fintech companies that might be able to offer them money.

Over 19,000 SMEs have been referred since the scheme was set up.

However, Treasury figures have revealed that only around 900 loans have been written. iwoca said it had been responsible for 55% of them.

This year has seen iwoca overtake two of the UK’s biggest banks for SME loans, with its share of small business overdrafts rising to 12% in the final quarter of 2018, putting it above Santander and HSBC. 12 | NACFB

The survey of 130 brokers from the fields of property and asset finance then asked respondents to indicate approximately what percentage of their customers they thought were being affected by Brexit uncertainty.

One in four responded that their customers were not being affected at all but nearly half (47%) felt that around a quarter of their customers were delaying plans or scaling back due to Brexit uncertainty.

Harley Kagan, group managing director at United Trust Bank, commented: “At UTB we’ve always taken the view that whilst it’s important to keep a close eye on the political and economic landscapes, we wouldn’t allow Brexit uncertainty to divert us from our own plans. It is encouraging therefore to see that most brokers have adopted the same stance.”

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Patron News

Patron News Kuflink

Newable

Kuflink reaches £50 million milestone amid busiest quarter to date

Newable completes 100% acquisition of Newable Business Finance

Kuflink has funded over £50 million worth of bridging and development loans via its investment platform since its launch, the peer-to-peer lender has announced.

NACFB Patron, Newable, has completed the acquisition of Newable Business Finance from its joint-venture partner Liberis. Simultaneously, Newable Business Finance has secured an enlarged funding line from its new, senior debt provider Shawbrook Bank.

Of that £50 million, the NACFB Patron has already returned over £23 million in capital to investors and a further £1.3 million in interest.

The milestone comes at the tail end of Kuflink’s busiest quarter to date, which has included a successful TV campaign, a brand new website and several key new hires.

Chris Manson, CEO of Newable, spoke of the changes: “Having launched in early 2017, Newable Business Finance has shown great growth and, as part of Newable’s continued expansion, we felt it was the right time to acquire full control of the business.

“It took us over a year to fund our first ten million, and we’ve been on an upward trajectory ever since – we’re reaching each milestone faster than the last,” commented Narinder Khattoare, Kuflink CEO.

“Shawbrook Bank will enable Newable Business Finance to continue to scale and help to address the funding gap faced by many of the UK’s small businesses. I would also like to thank our joint venture partners, Liberis, for their role in supporting the launch and growth of Newable Business Finance,” Chris added.

“Peer to peer has been in the spotlight lately, but this milestone shows that our investors understand why Kuflink is different from some lenders – our thorough due diligence, common sense approach to lending and the millions in capital and interest we’ve already returned to investors are the reasons we’re here for the long haul.

Rob Straathof, CEO of Liberis, said: “Liberis were delighted to help support the launch and growth of Newable Business Finance, and are excited to see them move forward on their journey to fund and mentor UK SMEs.”

“We’re just beginning to launch the first in a series of huge developments for Kuflink that will really shake-up the peer-to-peer market, so watch this space as there is plenty of excitement to come,” Narinder added.

14 | NACFB

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Case Study

Scaling ambitions for a budding entrepreneur Creative repurposing of a Midlands warehouse

Richard Payne Development Finance Director Oblix Capital

I

t’s now rather common for real estate lending companies to refer to their services as specialist. As the saying goes though, the proof of the pudding is in the eating and at Oblix Capital we often see a number of interesting scenarios that others may not consider.

A recent example saw the significant refurbishment of a former brewing-related Victorian warehouse in a secondary town in the Midlands. The client had already purchased the building with commercial use planning and was letting the building out. Although the site was in the former industrial centre of the town it was also only five minutes’ walk to the retail town centre, the railway station and a five minutes’ drive from a major trunk road linking the town to Birmingham, Derby and Nottingham – which meant that it was ripe for further development into residential apartments and thus began a planning process to re-categorise the building.

The client, an entrepreneur with a number of non-property and property-related ventures alike, had developed several small schemes previously, but nothing on this scale. Following his initial forays into development, his entrepreneurial spirit drove him to start his own construction business as well. Whilst it might be perceived by some lenders that there is a conflict of interest when the client also owns the building contractor, this can in fact sometimes work in the favour of the lender. As the client contracted with the construction firm using a JCT contract with the normal step-in provisions for lenders, Oblix was happy to proceed. Furthermore, the client had already been made an offer for 20 units from an investor who was of course wanting Buy-to-let opportunities.

16 | NACFB

The refurbishment was substantial and the reconfiguration of the internal layout extensive. The client was also creating common areas and providing parking spaces, all of which would appeal to singles and couples alike. Oblix discussed the presales with the client and it was decided to proceed with 20% as a Condition Precedent to the development loan. The client’s sales strategy and assumption was that the apartments would make excellent letting properties, and as such the majority of the units would be bought by investors.

Permission was therefore sought to convert to approximately 100 studio apartments, which would range in price from £80,000-£130,000.

Richard Berkley of The Property Funding Agency, who referred the case to Oblix Capital, said: “I’m always impressed by the sensible and creative approach that Oblix takes to such cases. This is another example where their development expertise was evident, and they were willing and able to assess the scheme on its own merits.”

“

Whilst it might be perceived by some lenders that there is a conflict of interest when the client also owns the building contractor, this can in fact sometimes work in the favour of the lender

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Patron Profile

Many happy (VAT) returns Enabling developers, investors and businesses to bridge the VAT element when purchasing a commercial property Nigel Smith Director Bloomsmith

A

s the first VAT bridging funder in the UK market, we would like to be able to claim that we were formed following a bout of inspired and inventive thinking.

We weren’t. Bloomsmith was created because, quite simply, we forgot the VAT element on a project that was four days away from completion and did not have the cash at hand to meet the obligation.

Having solved the problem for this completion – and in the slightly embarrassed hope that they were not the only developer in the market to have suffered from the ignominy of a sudden 20% deficit in their cash flow – investigations were made into whether there was a broader market for VAT lending. There was, and the business was formally kickstarted by Peter Bloom and myself in 2015.

As a further demonstration of our limited imagination and inventiveness, Bloomsmith was born and duly named.

I had formed one of the first specialised investment and development companies focussed entirely on automotive real estate in the UK back in 1996, with all the associated experience of land and commercial building purchase and construction.

With Peter Bloom leaving the business in 2018, I was joined by 18 | NACFB

Neil Petty whose background, interestingly, was in debt purchase.

As well as purchasing over £1.5 billion of debt Neil’s company became the first, and still the only, FCA accredited debt recovery company to operate on the highly sensitive LVST arena. Neil sold his business in 2018 and saw Bloomsmith as his next project.

Bloomsmith lends 100% of the value of the VAT due on commercial real estate transactions and unusually it does so without any charge (first or second) being taken on the property asset. Bloomsmith sees the charge as a false friend and something that is arguably unenforceable with a first charge holder in place and unnecessarily

“

Typically, we’ll get a call from a purchaser who has exchanged contracts on a site or vacant commercial building and has just been informed by the vendor that there is a VAT election on the property

“

From our position, we see a space in the market for a serious lending house, one that values predictability and consistency for all their stakeholders, brokers, senior lenders and borrowers alike

challenges the equity held in the project by the investors.

Typically, we’ll get a call from a purchaser who has exchanged contracts on a site or vacant commercial building and has just been informed by the vendor that there is a VAT election on the property. A 20% VAT shortfall on a £7.5 million purchase amounts to £1.5 million that is required, significant when considered on top of a 30% (£3.0 million) or thereabouts equity contribution.

Do you use the equity from another project and sacrifice the opportunity? Revert to credit with the senior lender and request they lend an effective 80-90% loan to coat at day one – and in turn compromise the return on the overall amount lent by virtue of exceeding their standard LTV and having to reallocate capital ratios?

Or do you forgo the deal on which much time and cost had been spent? These are all decisions that borrowers face and Bloomsmith understand from experience.

Bloomsmith only lend to newly formed SPV with the acknowledgement of a first charge holder, we do not as a rule lend on a second charge.

This is done for two reasons; firstly, a second charge will challenge the investors equity in the event of project difficulties and secondly,

the idea of a non-recourse SPV project means that the risks are quantifiable and contained and not contaminated through group or associated holdings. From our perspective, HMRC’s ability to exercise offset is something that often appears to pass credit committees by and this applies in the case of senior lenders as well.

In the interest of trust, simplicity and execution, the respected solicitors Fladgates LLP are engaged by Bloomsmith to process all transactions and to handle all of the money transfers and undertakings. This has been welcomed by borrowers and their professional advisors and is particularly pertinent where borrowers are operating using offshore fund structures and require surety and reputation on behalf of their clients.

As we all know, the market is a difficult one at the moment and the lending space is crowded and noisy with many lenders seeking volume at the expense of quality. Bloomsmith see a space in the market for a serious lending house, one that values predictability and consistency for all their stakeholders, brokers, senior lenders and borrowers alike. At a time of economic hiatus this is not something that is particularly fashionable or easy, but then VAT has not always been thought of as fashionable or easy.

NACFB | 19

Compliance

Get ready for SM&CR Introducing measures to make senior managers accountable for their actions and how they influence others

James Hinch Compliance Consultant NACFB

F

rom December this year the Senior Managers and Certification Regime (SM&CR) will replace the Approved Persons Regime (APR) and will change how people working in financial services are regulated. Its aim is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.

Why are the regulations changing?

In response to the 2008 banking crisis, as well as significant conduct failings such as the manipulation of LIBOR, the government established the Parliamentary Commission for Banking Standards (PCBS) to recommend how to improve standards in the banking sector. PCBS recommended a new accountability framework focussed on senior management. It also recommended that firms take more responsibility and focus on employees being fit and proper, and that there be better standards of conduct at all levels.

Parliament passed this legislation in December 2013, leading to the FCA and Prudential Regulation Authority applying the SM&CR to the banking sector. Parliament then made further changes to legislation in May 2016, extending the regime to all firms authorised by the Financial Services and Markets Act 2000.

• Limited permission consumer credit firms • All sole traders • Authorised professional firms whose only regulated activities are non-mainstream regulated activities

Examples of firm types Firm A is a dental practice incorporated as a limited company.

It is a Limited Permission Consumer Credit firm and is therefore a Limited scope firm.

Firm B is a medium-sized IFA and mortgage broking firm incorporated as a limited company. The firm falls within the Core tier and has 40 staff. Core firms will have the baseline of SM&CR requirements applied. This includes two Executive and 30 advisers, all of whom give investment or mortgage advice. Six of the remaining staff do not advise but perform various functions connected to financial services. Two of the remaining staff are not involved in financial services activities at all.

Firm C is an Enhanced firm within a global banking group. It employs 3000 staff, performing a variety of roles for the UK entity, some of whom hold roles in scope of the Certification Regime. Two of the firm’s five Non-Executive Directors are senior managers of other group entities.

What are the requirements?

What applies to me?

Once you have categorised your firm, you can then use the following infographic to provide a snapshot of requirements based on your scope. We have outlined below the core requirements which will apply to most NACFB Members:

Through SM&CR, firms will be categorised as one of three types; Limited, Core or Enhanced. Identifying your firm type will be the first step in identifying what requirements the SM&CR asks of you.

Prescribed Responsibilities (PR)

Limited firms will be subject to fewer requirements than Core firms.

SM&CR covers all firms that currently have a limited application of the APR, including: 20 | NACFB

These are specific responsibilities defined in the FCA Handbook that a firm must give to a senior manager. They are in addition to the inherent responsibilities that are an essential part of a senior manager’s role.

The infographic is a high level illustration only and may not include granular workstreams for the SM&CR

Duty of Responsibility

Conduct Rules

Managers will have a Duty of Responsibility under FSMA. This means that if a firm were to breach one of these requirements, the senior manager responsible for that area could be held accountable if they hadn’t taken reasonable steps to prevent or stop the breach.

Conduct Rules are intended to improve standards of individual behaviour in financial services from the top down and the bottom up. They represent a meaningful change in the standards of conduct we expect from those working in the industry.

Statements of Responsibility (SoR)

All Members of NACFB have access to our SM&CR hub. This bespoke hub provides a suite of tools, supporting NACFB Members through their SM&CR journey.

SoR is a single document that every senior manager will need to have, clearly setting out their role and responsibilities. SoRs need to set out what senior managers are responsible and accountable for, rather than how they carry out those responsibilities.

Certification Regime The Certification Regime covers specific roles within a firm that aren’t Senior Management Functions, but their roles can have significant impact on customers, the firm and/or market integrity.

It is down to the firm to approve these people and this needs to be done at least once a year, demonstrating that these people are suitable to do their job. The Certification Regime is a requirement under FSMA.

Fit and Proper Senior managers must be fit and proper to do their jobs. The FCA set out what firms need to do to verify fitness and propriety which is within the FIT Sourcebook in the FCA Handbook. It is for firms to assess whether a staff member is fit and proper for them to discharge their role.

Find out more at: nacfbcompliance.co.uk

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To express your interest in an upcoming free webinar on SM&CR hosted by the NACFB please email events@nacfb.org.uk

Through SM&CR, firms will be categorised as one of three types; Limited, Core or Enhanced. Identifying your firm type will be the first step in identifying what requirements the SM&CR asks of you

NACFB | 21

Ask the Expert

Making your company website work for you

QA ​David Hunter Managing Director D2 Creative Ltd

How important is it to run an up-to-date website?

We often ask prospective clients to reflect on whether they are putting their best foot forward or whether their online presence leaves little to be desired. The design should focus around the needs of the target customer with easily accessible, engaging content. With approximately 60% of web traffic now coming from mobile devices, it is also essential that a website is mobile-friendly and easy to view on a smaller screen.

What common mistakes do you see finance businesses make when building their site?

Lack of a clear strategy. It used to be said that if you build it, they will come, this is a common misconception and simply not true for finance business websites.

You need a robust digital marketing strategy to drive both leads and sales.

Another common mistake is underestimating the work involved, if you think that setting up a website is easy, you are mistaken.

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It’s a process that demands your full attention and will require a fair amount of testing and measuring.

What are the design and functionality basics of a strong website?

The basics are threefold. We ensure the websites we develop are both fast-loading and secure, they possess a mobile-friendly design that an audience can easily access and contain compelling, relevant business focussed content.

How can you stand out from the crowd?

The obvious factors are the design, brand identity, business messages, images and themes. The other important factor, often overlooked, is ensuring your content is frequently and consistently updated.

This helps build trust with your customers who may rely on your site for useful product and service information.

What is SEO and how can it increase leads for brokers?

Search Engine Optimisation (SEO) increases your website’s search ranking for business-related keywords. When potential

customers search for those keywords, they find your content and follow those links back to your site where you can convert those visitors into leads.

How can you interpret web traffic reports and use that data to enhance your site?

You need to be able to track what’s happening on your site in order to really understand what works and doesn’t. Google Analytics is a free, powerful tool that will allow you to analyse all this data and feed this back into your evolving strategy.

What questions should a broker ask a web designer before instructing them?

You should think of a web design company as your marketing partner. The more they understand your business the more they will be able to help. The key questions you should be asking are: What is your design process? Can you help produce content?

How long will the project take? Will I be able to view the work in progress? Will I have the ability to make updates? By asking these questions, you can avoid the major pitfalls that cause many web design projects to fail.

Find out more at d2creative.co.uk

Special Feature

Advertising Feature

The Praetura story so far…

Exploring the principles on which our business has been built Ric Simmons Sales Director Praetura Asset Finance

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To be a ‘Praetura Person’ you will need nous, you will need knowledge, you will most certainly need a sense of humour and most importantly, you will want to put the needs of the brokers and SMEs we are here to serve, first.

The next chapter

stablished in 2013, Praetura Asset Finance was the first truly independently owned asset finance company to enter the UK marketplace in 15 years.

Our client-focussed approach to lending has seen the business grow rapidly in a short space of time, with the original five-year plan having been achieved and exceeded ahead of schedule.

There are a variety of avenues we are looking to explore, to help us achieve our potential, including:

2019 has seen the start of a new phase for our business; one of growth and expansion. We have made our first acquisition, with Kingsway Asset Finance becoming part of the Praetura Asset Finance Group, moved to new bespoke corporate headquarters, unveiled our new branding and announced our new securitisation facility, which will enable growth in the Group’s loan book to provide up to £200 million in funding to SMEs across the UK. But we’re not stopping there.

• Adding a new sales-focussed dimension to our underwriting team

In the words of our managing director, Mike Hartley: “Exceeding our five-year mission was an achievement, but with that, also came the realisation that there is so much more we could be doing. We have the structures in place to take this business to the next level and beyond. We’re now looking for the right people to add to our expert team, to help us get there.”

Praetura People Praetura is very much about people; the people that are part of the skilled workforce that we’ve built, the brokers and advisors we are proud to work in partnership with and the people in the businesses that we provide funding for.

What the success of our early years has taught us, is that there is very great value in the principles on which our business has been built and the potential is there to do much more. But we need to add to the team of people we have working for us, to enable that to happen.

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• Expanding our sales team • Increasing our presence in the South

If you are an individual with business development, vendor sales, or sales-led underwriting experience and you are looking for an exciting new challenge; Praetura Asset Finance could be your next chapter too.

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To be a ‘Praetura Person’ you will need nous, you will need knowledge, you will most certainly need a sense of humour and most importantly, you will want to put the needs of the brokers and SMEs we are here to serve, first

Alternatively, if there are established sales teams that are looking to take their careers to the next level together, Praetura Asset Finance could be the place where that could happen.

forward-thinking company with a bright future ahead of us. As we grow, so will the opportunities for every member of our team.

A growing team that grows together, as one company

Praetura Asset Finance has exceeded expectations, but we want to do more, to become stronger and more influential within the market, so that more SMEs can benefit from asset finance that’s been given the ‘Praetura Touch’.

The core values on which our business has been built will always remain the same: Praetura puts people first, not just the businesses that our funding assists, but our staff too. Where possible, we have and will always look to promote from within, so choosing Praetura is very much a long-term decision.

Our team is going to continue to grow because we are a dynamic

If you’re ambitious yet approachable, driven yet diligent and you want to be part of a team that are striving to make a difference, in our own inimitable way, please get in touch by emailing our recruitment team at jobs@praeturaaf.com

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NACFB | 25

Aldermore Invoice Finance can help fuel ambitions…

We’re here to help your clients go faster

Long-term partners

Flexible funding that matches ambition

We can convert unpaid invoices and help release the cash value held within assets.

Providing up to 90% of the invoice value straight away to provide a healthy cashflow and help propel your clients business forward.

Our relationship managers are here to offer expertise and specialist advice about invoice finance and business planning. We really get to understand the nuts and bolts of your client’s business and their ambitions.

We understand that no two businesses are the same and that flexibility can help your client’s business to stay nimble. We can provide a facility that will evolve to meet business aspirations.

Putting your clients in pole position for growth.

We can offer Factoring, Invoice Discounting and Asset Based Lending, which could help you release the cash value held in your existing assets.

For more information: www.aldermore.co.uk/invoicefinance Talk to one of our Invoice Finance experts today: 0330 134 6350 FOR INTERMEDIARY USE ONLY. Aldermore Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. (Financial Services Register number: 204503). Registered Office: 1st Floor, Block B, Western House, Lynch Wood, Peterborough PE2 6FZ. Registered in England no. 947662 . AIF563-0219-100417

COMMERCIAL FINANCE

Ten years at the top Fifty takeaways from the biggest and best show for UK intermediaries

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Wednesday June 19th saw a record-breaking 1707 delegates pass through the registration desk at Birmingham’s NEC – up 26% on the previous year.

The delegates were joined by 138 exhibitors spanning the asset and leasing, Buy-to-let, bridging, development, commercial mortgages, unsecured, invoice and factoring and cashflow sectors.

This was the NACFB Commercial Finance Expo’s tenth birthday, a decade which has seen attendance increase by over 500%.

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The NACFB Expo wasn’t the only tenth birthday being celebrated.

Support sponsor Aldermore heralded a decade of providing business loans. Their ‘Spin the Birthday Cake’ competition attracted 282 entries.

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The event’s mobile app, sponsored

by Keystone Property Finance, received 8691 page hits on the day – 44% more than last year.

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40 new brokerages expressed an interest in becoming a Member of the NACFB – the UK’s largest independent and not-for-profit trade body for commercial finance professionals.

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Attendees shared 1326 Twitter posts on the day using the event hashtags #CFE2019 and #NACFB.

Half of delegates downloaded ‘CFE 2019’ the mobile app. The app was used to book 65 meetings and send 139 messages to exhibitors.

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NACFB | 27

Special Feature

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Rise and shine: Throughout the day 70 pairs of shoes were buffed and polished on the Hope Capital stand.

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There has been far greater representation for the asset finance broker, with a wider range of lenders than ever before – helping us to fill the gaps on our lender panel

1 minute and 32.41 seconds – The fastest lap of the day on the Shawbrook stand.

Tom Perkins of NACFB brokerage Charles & Dean reflects on the Expo’s broader appeal.

Seven new funders asked to become Patrons of the Association with four suppliers asking to become Associate Patrons. We’ll review how they can enhance your membership before we make the decision to onboard them.

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We are living in a regulatory world and the map is shrinking in the non-regulated arena. We believe it’s important to remind firms that compliance is an ongoing journey, not a one-shot trick James Hinch, NACFB Compliance Consultant, in a discussion with NatWest’s Adrian Dixon on scanning the regulatory horizon.

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54 NACFB brokerages signed-up to the Association’s lead generation platform findSMEfinance. Over 340 NACFB brokers are now receiving finance enquires from UK SMEs, join them today at findsmefinance.co.uk/join

The NACFB has now passed over 1800 individual brokers proudly operating their brokerage under the NACFB logo – a record for the Association.

1024 – The number of drinks served at the coffee cart sponsored

by Accredo.

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The NACFB agreed to partner with six new brokerages; helping them obtain authorisation with the FCA prior to being onboarded as full Members.

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The event also saw 1124 LinkedIn posts featuring the terms ‘NACFB’ and ‘CFE2019’.

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5% of SMEs are willing to use an online lending platform a 1% increase on last year

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1 minute and 8.32 seconds – The fastest lap on of the day on the Masthaven stand.

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Jeremy Crinall of Funding Circle during the conference arena’s Unsecured Finance panel session.

I’ve been impressed by the energy and dynamism in the room, in an increasingly digital world to have so many people meeting face-to-face is still exciting

Posts relating to the event across all social media platforms were seen by over 560,000 people.

NACFB Board Director Phil Gray on the Expo’s buzzing atmosphere.

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Shake it up: Over 200 cocktails were served up over on the Lendhub stand – with the mojitos by far the most popular.

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By 10.30am we’d had a £1.5 million development finance deal introduced to us by an NACFB broker Paul Williams, senior broker manager, Hodge Bank.

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The NACFB announced at Expo a record-breaking year of membership growth. The Association announced exclusively at Expo that it now works with the direct support of 1014 commercial finance broking firms – an increase of 95 membership firms in 2019 alone.

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For us, the real benefit of Expo is its efficiency.

Being able to ask detailed questions to all of the lenders on our panel is why we’re here, the benefits of today ultimately will be felt by our clients Richard Drake of Drake Business Funding shared following the NACFB’s lunchtime ‘Meet the Team’ session.

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Funding has changed and what was impressive was to see how the experts have adapted to support the wants and needs of those seeking finance.

The ability to be agile, to listen and engage with the borrower, their business and ideas was reflective in each conversation we had

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The number of overdrafts given to small businesses by the banks has been reduced by 50% since 2011

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All funders will start to look at alternative commission structures Ian Aitchison of Close Brothers Business Finance suggests the impact of the motor finance review could extend beyond just the vehicle finance space during the Asset & Leasing panel session.

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Noel Anderson of NACFB brokerage Anderson & Macaulay Mortgage Services explains the Expo’s appeal to brokers from all over the UK.

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Colin Goldstein of iwoca sharing his insight on the last panel session of the day.

98 decibels – at its peak, the room noise reached just under one hundred decibels #chatty.

Today I’ve learned of four new lenders who can work with brokers in Northern Ireland, which I wouldn’t have known about. A day like today reduces my workload by 1000%

Lucy Bradban Principal at EMW LAW LLP.

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The NACFB compliance team answered over 55 regulatory queries to delegates, providing advice on data protection, fee disclosure and the impact of the upcoming Senior Managers & Certification Regime.

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“Lloyd’s data finds that 30% of SMEs will engage a broker before their main bank – that’s 1.5 million UK businesses,” – Andy Bishop of 2019’s headline sponsor Lloyds Bank on how SME awareness of alternative routes to finance is growing.

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"123456, Password, 12345678, qwerty and 12345" Joe Cooksey of Barclays reveals the five most common passwords during his cyber and fraud ‘Meet the Expert’ session.

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In this new era for brokers, informed and dynamic commercial finance professionals – championed by a strong and independent trade body – have a vital role to play in ensuring Britain continues to prosper beyond our eventual exit from the European Union

Over 350 cups of ice cream were given away over on the Market Invoice stand – with the most popular flavours being Oreo and Nutella.

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NACFB Chair, Paul Goodman, reaffirms the role of the broker in his opening address.

Online click-tofinance options will only ever be a threat to brokers if the broker is not already adding value

Gavin Wraith-Carter of Hitachi Capital Business Finance responds to whether technological advances threaten the role of the asset finance broker.

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2500 lanyards were given out to attendees alongside 1350 tote bags – all of which were snapped up by midday due to overwhelming demand.

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“25% of all SMEs in H2 2018 wanted to be significantly bigger and were prepared to take risks to succeed,” – Shiona Davies of BVA BDRC, the team behind the SME Finance Monitor, on a decade of shifting attitudes to finance.

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“Plenty of compliments on our stand, which probably wouldn’t look out of place at The Chelsea Flower Show!” – Daniel Bondzie proving the grass is always greener over in the FUNDERPARK.

“A key piece of advice I would offer to brokers is to fully understand the type of activity they are undertaking – whether they are operating in a regulated or unregulated environment.

You can then map that to the correct rules and requirements,” – Adrian Dixon of NatWest on the key takeaway for brokers attending the regulatory horizon session.

NACFB | 31

Special Feature

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The government decided last October to make 177,000 properties HMOs – never has a broker’s role been more important to guide your landlord clients through the process David Whittaker, of Keystone Property Finance, on brokers reacting positively and adapting to legislative change.

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“I am humbled, proud and absolutely delighted to be the headline sponsor for 2019,” said Andy Bishop of Lloyds Bank, before adding that they intend to lend up to “…£18 billion to support businesses across the UK in 2019.”

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This is the first time we’ve run four sector panel sessions in our conference arena and I was really pleased to see over 80% attendance in each of them The NACFB’s Norman Chambers reinforces his belief that brokers are here to enhance their industry knowledge as well as meet the funders.

This is our second year in a row exhibiting at Expo.

It is the event to be at as far as I’m concerned – this is the big one Ryan Parrett of Fiduciam on what keeps bringing him and his team back.

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“Diversification, Technology, and Brexit,” – Darwin Delahaye from Spotcap outlined three impacts that will impact the lending industry in his Unsecured finance ‘Meet the Expert’ session.

“We are still buzzing from NACFB Expo. Delegates were upbeat about the commercial finance industry and feeling optimistic about the UK economy. Our highlights were celebrating successes with lenders and being part of a community of finance brokers supporting each other,” – Paul Orchard of Genie Lending Ltd reflects on the day.

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“4.6 million households in England rent from private landlords,” – John Heron of Paragon emphasising the size of the rental sector and its growing important to the housing mix during the Buy-to-let panel session.

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“Lifestyles are changing, and clients are still not having their financing needs met at the speed they need it,” – Nicholas Jones of Together, on the need for faster funding during his Meet the Expert session on Bridging finance.

Wednesday 17th June 2020 – the date of next year’s Expo.

Registration for delegates opens in 2020 and exhibitors can secure a stand today.

Find out more at: www.commercial financeexpo.co.uk

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Special Feature

Loan spreading: a race to the bottom?

Analysing a practice that carries huge reputational risk to broker, lender and client Martine Catton Chief Executive Officer Catalyst Business Finance

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s a lender one of the most important decisions we make is to lend or not to lend. We want to ensure that clients looking for additional funding are doing so sensibly.

They need a clear understanding of the commitment they are making, the monthly cost, the required security and of course the ability to repay.

More recently there has been a concerning uplift in the number of clients with several loans provided by a myriad of lenders.

Much has been written of late referencing loan stacking and the threat it potentially poses to both client and lender alike.

A business, during its lifecycle will often require additional funding. Given the plethora of lenders available there has never been a greater need for the advice of an independent broker who has experience across the wider lender landscape.

It’s fair to say many clients will have a predetermined requirement in mind. Often, they will say: “I need £200k”. The broker then begins the search to meet the client’s need. In order to make confident credit decisions the lender wants to know what the funds will be used for, the required term, background and history of the business and its management team.

Many brokers will also undertake this level of due diligence to better understand the needs of their client. Their job is then to match the right funding to the right requirement. As we have experienced at Catalyst, the secured and unsecured loan market has seen exponential growth and loans can be considered, often incorrectly, the ‘right funding’ for almost every finance need.

Brokers can obtain swift credit decisions from many of the loan providers and in some cases with only a ‘bare bones’ submission.

The market is a competitive one, so a quick decision with limited input can win the deal.

What happens if the preferred lender can’t or won’t offer the full facility needed? A new way of meeting the need has emerged; that of ‘loan spreading’, which by its very existence creates ‘loan stacking’. This practice is now on the agenda of many lenders and industry bodies such as the AABF. It presents a new risk; not only to the lender, but also to the reputation of the broker and most importantly it can have a huge impact on the client.

The practice of loan spreading can happen very easily. A broker will introduce a new opportunity to a lender. They are advised that they are in competition with another lender to provide a loan of £100,000. After detailed due diligence the prospect and the broker are offered the full facility. The lender gets the signed documentation and releases the funds. It’s only when ongoing monitoring raises a red flag post pay out, that then reveals that both lenders agreed the facilities independently and the broker delivered not one but two £100,000 loans.

So why is there an issue here? Both loans were very short term.

Each lender assessed the affordability based on £100,000 not £200,000. That is a very different proposition and potentially would have required more in-depth assessment. Some lenders have differing criteria based upon size of lend; term of loan and security required. The point here is both lenders were not given the full picture. Credit decisions are based upon thorough investigation

and had both lenders known the requirement was £200,000 they may have rejected the facility based upon their affordability criteria.

The most concerning aspect of this practice is the impact it may have on the client. It could result in missed payments which in turn start a domino effect of additional fees, demands for payment and further compounds their cash flow position. This could also affect their credit score and place undue stress on the management teams. It is highly likely they would have paid more for the funding, as many facilities have set up or arrangement fees. So, they could have paid twice or three times as much at commencement of the facility.

Our aim should always be to deliver funding today whilst helping to build an industry to be proud of tomorrow. From initial enquiry to in-life management our responsibilities are clear; the client must be at the heart of all we do. We must link the right asset to the right funding package, it is essential that there is transparency between all parties. For many brokers best practice is part of their DNA and their role in supporting their clients and the lender is more crucial than ever before. It is vital all parties have complete transparency to ensure the right decisions are made for all concerned.

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Brokers can obtain swift credit decisions from many of the loan providers and in some cases with only a ‘bare bones’ submission

NACFB | 35

Special Feature

Advertising Feature

Technology and personal service are empowering brokers New services to speed up deal authorisation are launching at Lloyds Bank, complementing the one-to-one relationships brokers value so highly Craig Muir & Robert McLagan Associate Directors Lloyds Bank

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oing business with Lloyds Bank’s dedicated Hire Purchase broker channel is about to get even simpler with an API that will directly link the bank’s system to your own.

The API pilot commences this month, following hot on the heels of the introduction of auto-decisioning on deals, to further help reduce the time it takes for a proposal to go through the system.

How we support brokers The bulk of our asset finance broker offering is made up of Hire Purchase; the simplicity of the product and competitive pricing makes it attractive to businesses who use it to smooth out their cash flow and avoid spending large initial outlays on depreciating assets.

Demand for this type of finance is high; the Hire Purchase Broker business has grown over 50% in the last two years, thanks to a strong team of Broker Relationship Managers who work closely with their panel of brokers.

We are a traditional hard asset funder and are proud of our proposition – providing a dedicated Relationship Manager looking after a small panel of brokers, working very closely with them to help them get their deals approved, structured and priced to win.

We have relationships with brokers across Britain, from Inverness in the North to Truro in the South and everywhere in between.

Relationship Managers act as a conduit between brokers and the bank, helping them meet the bank’s guidelines and supporting them through all stages, from submitting a deal for consideration, to completing, transacting and paying out the deal and the customer making use of the asset.

We add further value to the broker by guiding them through the credit, Know Your Customer and Anti-Money Laundering processes.

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Once a deal has been secured, the team then ensures a swift and smooth pay-out.

With the introduction of APIs, Relationship Managers can continue to focus on providing this support, cutting down on time-consuming routine admin tasks and offering brokers faster responses.

The effect of auto-sanctioning Another time-saving innovation is the recent automation of underwriting parameters, which has helped simplify and speed up decisions, getting many more deals through the system.

And further innovation is also on the horizon, with the building of a Broker Portal. All these developments will work alongside, and complement, the personal service brokers receive from Lloyds Bank.

Ultimately, the new developments will support brokers in continuing to offer the rates to win the best-quality customers, as well as demonstrate that we can scale our business, growing while still providing the same levels of high-quality service.

If you would like to join the Lloyds Bank broker panel, please contact: Craig Muir: Craig.Muir@lloydsbankcf.co.uk Robert McLagan: Robert.McLagan@lloydsbankcf.co.uk As part of our wider broker proposition we also offer access to asset finance solutions on an introduced basis for non-specialist brokers, ensuring the widest access possible to our solutions for clients.

To find out more and understand how our Business Development Managers can support you and your clients with Hire Purchase visit: Lloydsbank.com/businessintermediaries Please note that any data sent via e-mail is not secure and could be read by others.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 119278.

We adhere to The Standards of Lending Practice which are monitored and enforced by the LSB: www.lendingstandardsboard.org.uk and apply to businesses which have an annual turnover of no more than £6.5 million.

We value our long term relationships Close Brothers has a well-documented history of lending through all economic cycles.

We can only do this because of the strong relationships we have with our brokers and customers, who know they can expect consistency at all levels.

Contact our team today to find out how we can support you with asset finance options.

0330 134 6400 broker.support@closebrothers.com

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 oďŹƒce is 10 Crown Place, London, EC2A 4FT.

Special Feature

Securing the right outcome for the client Assessing the right options at the beginning before a bridging loan is taken out could save the borrower time, expense and stress Gary Bailey Managing Director Hope Capital

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o exactly what does the right client outcome look like for a bridging loan client? Is it the lowest rate, the lowest fees or something else entirely? Arguably it is the ability of their broker, and indeed the lender, to look ahead to the end of the loan term before the loan is completed.

Of course, every borrower wants the most inexpensive loan, and every broker wants to find this for them, but the savvy broker understands that a good bridging deal is not just about rate.

Sometimes it is not even just about speed of turnaround; while for some clients this is essential, for others, the awareness of both broker and lender of wider issues will ultimately deliver a better outcome.

The longer-term outlook for a loan, for example, is something that the novice bridging broker, and perhaps newer bridging lenders, won’t always think about, but take this example: The borrower may well want to borrow the maximum they can, this is quite a common scenario. The usual maximum LTV on a bridging loan is 70%, occasionally pushed to 75% LTV. A broker may feel really pleased if they find a higher LTV for their client so the client needs to stump up a lower deposit but depending on how they intend to pay back the bridging loan, this decision could end up very costly.

Much depends on the client’s proposed exit route. Sale is often a common exit strategy which must be plausible within the period of the loan. If a client has a high LTV bridge but their proposed exit route is a refinance then the broker needs to know, upfront before 38 | NACFB

the bridging loan is first taken out, which other lenders would be likely to refinance this loan away at the end of the term. There are few long or short-term lenders who will refinance a high LTV bridging loan and it is clearly not in the client’s best interests to get to the end of their bridging loan term and only then discover that no other lender wants to take their loan on.

When this happens, the borrower could well be left in a sticky situation. If they get to the end of their loan with no options, they could end up in default with the charges and raised interest rates that that incurs. At that point there are really only three options: They could try to extend the loan with their existing lender – but if the LTV is at the top end of the scale then the lender may not want to extend; it could be too costly for them, with any profit eroded by rolled up interest.

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Of course, every borrower wants the most inexpensive loan, and every broker wants to find this for them, but the savvy broker understands that a good bridging deal is not just about rate

Raise capital from other means or investments. If the borrower has a portfolio of properties, then they may have to raise capital on one or more of their other properties in order to pay off their bridging loan. But this incurs more cost, potentially more risk in other areas of their portfolio and a reduced profit on those other properties.

If neither of the above are an option, the borrower may have no other choice other than to sell. While this should clear the debt, if their plan had been to let the property or develop it further this could be a very unpalatable decision.

Weighing up these options at the beginning, even before the bridging loan is taken out, could save the borrower time, expense and stress.

It is helpful for both broker and bridging lender to be educated to the wider market and be aware of the options in the market before the bridge loan completes, something that newer lenders may struggle with.

If a subsequent lender can be lined up at this point, then all well and good to go ahead with the loan. If this does not look like a realistic prospect, then it is absolutely the right advice for the client to raise a little more deposit and take out a lower LTV loan. Alternatively, they could look at ways to restructure the loan so that it gives the clients the options they need to achieve the outcome they want at the end of the loan period.

A bank of knowledge not simply a bank of money Our support for your broker business goes beyond finance. We can connect you with the right people, with the right knowledge, to boost your clients’ businesses and help them grow.

Search: NatWest Brokers

NACFB | 39

Industry Insight

Strengthening trust between banks and SMEs Rebuilding business faith in the lending community is a vital step in sector growth Nikki Turner & Nick Gould Co-founders & Directors SME Alliance

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ME Alliance was created by a group of people via Twitter in autumn 2014. It is a support, knowledge sharing and lobby group now attracting a lot of media and other interest. Its members owned or were otherwise connected with SMEs. Their lives and businesses were destroyed by the actions of corrupt bankers and their advisors, generally in the first ten years of the century, although some as long ago as 1998. SME Alliance and its members have been particularly involved in exposing serious wrongdoings at UK banks.

We hope this will be one of a series of short notes about our work, which we take very seriously, and other related topics. It is also important for you, the lending community, to accept we would never document anything that isn’t demonstrably true, although some things may be unbelievable, which is a different point.

For our first piece we thought we’d mention the failure of regulators and those tasked with enforcing the UK financial system. Financial services have long been held out as one of the UK’s great assets and London is regarded as a global financial centre. We have long professed to be a country based on the rule of law, corporate governance and ethical business practices.

On the flip side, and in the real world where life is brutal, we find something rather different. We have too many complex or badly 40 | NACFB

drafted rules which are unenforceable and therefore unenforced.

Our regulators are supine and the revolving door syndrome between, for example, the FCA and various banks, is well known.

As a direct result, there are up to 60,000 cases of mis-selling or other mistreatment of SMEs by major banks, which are about to be investigated by a new committee of which SME Alliance is a member. This new dispute resolution scheme (DRS) is the first time, to our knowledge, representatives of SMEs, Parliamentarians and other stakeholders, will be working with major banks to try and find a solution for the thousands of legacy cases and to implement a system going forward where justice is accessible.

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Had more been done by regulators and the authorities to hold individuals to account, thousands of UK SMEs and many thousands of jobs would have been saved

Such is the level of corrupt practices used by some banks, which is regularly reported in the media, there is a risk the public at large have become immune to the effect this has had on SMEs. No one has yet tried to analyse the human and economic effects of the destruction of thousands of SMEs. Bankers have always tried to anonymise these matters, but this is about real people with real lives. It’s about lives destroyed, businesses destroyed, suicides, increased incidences of serious illnesses, homelessness and family breakdowns. On the economic front and over the last 20 years, it’s about billions less in taxes being collected, increased social security and increases in those needing help from public services like the NHS. To those business owners who have lost everything because of unethical and in some cases criminal conduct, the phrase “too big to fail, too big to jail” rings uncomfortably true. In most cases banks and bankers are only chastised by huge fines, paid for by shareholders. In very few instances are individuals held to account with a few notable exceptions e.g. the HBOS Reading fraud where two bankers and four of their associates went to jail for a total of 47.5 years.

Many would say, and we would agree, had more been done by regulators and the authorities to hold individuals to account, thousands of UK SMEs and many thousands of jobs would have been saved. Even many bankers we speak to welcome a change in culture and a fresh start between UK banks and UK businesses.

SME Alliance is now having quarterly meetings with several banks which we hope will ultimately help resolve many of our members’ cases and improve relationships going forward.

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We hope we can be instrumental in making the DRS work as a genuinely independent and trustworthy way to resolve disputes and rebuild trust between banks and business

All the same, we realise we are a long way from saying our members can trust banks and we hope we can be instrumental in making the DRS work as a genuinely independent and trustworthy way to resolve disputes and rebuild trust between banks and business.

It’s early days but, at the very least, we, the government, the regulators and our major banks agree something must be done to redress the balance of power between the financial sector and SMEs who, everyone agrees, are the backbone of the country but, nevertheless, have been denied access to justice for years.

Find out more at: smealliance.org NACFB | 41

Industry Insight

No stone unturned: the importance of independent reviews Enabling greater transparency and trust from the organisations you partner with

​Brian Pitt Chief Executive Officer Rockstead Group

but equally brokers need confidence that they have connected with the right partners.

So we were given a robust backdrop upon which to do our work – and we do relish a challenge!

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arlier this year we were delighted to be asked by the NACFB to audit its corporate governance structure and procedures. This is not an unusual request for us as we are finding more trade associations aspire to work within the principles and rules that apply to their Members. The NACFB is no different and it is laudable that it wished to independently test its compliance against the same requirements as its 1800 commercial finance broker Member firms. The NACFB requirements were comprehensive and encompassing, in that we were tasked with reviewing the Associations: “…governance, processes, policies and adherence to regulatory arrangements.”

When reviewing similar entities, our review focusses on a governance hierarchy outlined in the following pyramid. We find it provides us with a structure to work to, with the added benefit that nothing escapes our gaze.

For organisations like the NACFB independent compliance reviews are far from vanity projects, as all the people and processes within the business come under review. Forward thinking trade associations like the NACFB, recognise the benefit to the membership of such assessments and are happy to ‘risk’ the external scrutiny to ensure their Members benefit from a well-run efficient, effective, compliant and well-governed trade association partner. Put simply trade bodies need to be subject to external examination otherwise they cannot deliver to members the benefits they need to provide.

In the case of the NACFB, the Association operates as an industry voice, engaging with lenders and brokers, helping SMEs and maintaining a Code of Practice, these elements all point to a requirement to maintain the highest ethical and governance standards itself. There is clearly a benefit to brokers who engage with organisations that undertake such strong self-governance, 42 | NACFB

So, from a high level summary, what did we find?

Principles for Business: It is the FCA’s view that ethical integrity is linked to corporate culture and leadership. The FCA identifies key drivers such as leadership, strategy, decision making, controls, recruitment and training and rewards as important components

enabling firms to demonstrate compliance with the PRIN Sourcebook. We were able to report positively in each of these areas.

Governance: The NACFB Standing Orders were fit for purpose and it was encouraging to see that the non-executive directors had attended a training day organised by the Institute of Directors.

The FCA requires that there is a Board of Directors in place with the appropriate skills, knowledge and experience to provide proper oversight.

We positively noted the role of the NACFB Nominations Committee that ensured NACFB Board Members were of a suitable calibre.

Policies and Procedures: We considered that appropriate policies and procedures were in place to satisfactorily support NACFB’s commitment to the principles for business.

Quality control: We found ‘four eyes’ checks were in place in the relevant areas.

Risk assessment: We considered that the identification and mitigation of risks were effective.

Supplier oversight: One of the increasing areas of focus for

regulators is the oversight of third-party suppliers, especially where the services provided by the outsourced third-party are business critical. The NACFB are fully aware of the issues and risks and we reviewed the Third-Party Suppliers Outsourcing Policy which outlined the assessment of suitability standards and details the NACFB’s chosen suppliers. The process for on boarding suppliers was broadly proportionate and reasonable.

Like any formal independent review, there are bound to be some development points and we were greatly encouraged to see the NACFB accepted our recommendations which is further evidence of a genuine desire to develop the corporate governance structure, which we applaud. We are looking forward to continuing to work with the team there to help them as the Association develops and grows.

We would like to thank all the Association’s staff who we interacted with; their constructive attitude made our job enjoyable. Having a collaborative approach in such reviews provides better outcomes for all parties.

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NACFB | 43

Broker Voice

Asset finance brokers are here to stay Enhancing our offering through challenges, closer partnerships and increased diversity

​​Stephen Jenkins Head of Direct Sales Tower Leasing

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he age of the leasing broker is over. Now is the dawn of the super brokers, hybrid lenders and Fintechs.

We had it good for a long time, pretty much up until the point alternative arrived, traditional equipment finance intermediaries like us were pretty much the only options available outside of the banking system.

It would appear that this is where the biggest battleground will be; chasing the SME and where the leasing sector has perhaps been slower to respond to the uptake of new technologies.

Websites, portals and online applications for re-sellers are all well and good, but the future has to be customer facing. Technology is only part of the bigger picture of remaining relevant – but a vital one.

Of course, technology is nothing, no matter how advanced, without the human touch and remaining true to our fundamentals – excellent customer service and highly trained, knowledgeable teams.

Technology and increased competition

The future of asset finance

An influx of new lenders, short-termers and innovative factoring providers have had a hugely beneficial effect on the existing market leaders, not to mention for the SMEs – business owners have never had so much choice. Healthy competition has naturally driven innovation resulting in a greater product range, but it’s also had a ‘race to the bottom’ effect as far as rates are concerned, resulting in decreased margins and a potentially riskier approach to underwriting – a trend that’s simply not sustainable.

We were the backbone of the commercial lending sector – behind only the high street – and we still contribute a huge amount to the economy with our support of the, mostly micro and small, UK businesses.

The lines have become blurred and it is becoming harder to see where one lender ends and another begins. Everyone is chasing growth, with rates already at historic lows – and credit appetite as broad as it has been – there is a growing pressure to expand product ranges with many overlapping players operating in the same space.

There used to be a clear divide between lender and broker, with both generally having a narrow specialism, but it seems that now everyone is stepping on each other’s toes. A broker’s own book lending has reached the point where for some outfits their actual broking activities are almost non-existent, with a rise in ‘broker-tobroker’ solutions which, not all that long ago, was a bit of a dirty term.

It’s also not uncommon, although perhaps not as widely advertised, that lenders are providing introductions to other lenders, some of which they are in direct competition with, which seems to be at odds with the traditional lender model and potentially creates a conflict of interest.

It will of course settle down eventually however in the meantime, it is imperative we keep a close ear to the ground when it comes to the swift changes taking place, be that a new lender, product type or of course those related to regulation.

As an industry, the asset space traditionally had a focus on the equipment vendors of this world and the direct sales channel normally took a back seat. An interesting impact from the Fintechs is that most of them have completely inversed this outlook driven by their attitude towards technology.

According to the ever-reliable Finance & Leasing Association, in 2018 their members “…provided a record £33 billion of finance to the business sector and public services, a 3% rise on the figure for 2017, representing over a third of UK investment in machinery, equipment and purchased software in the UK last year”. It’s hard to picture how many jobs have either been created or saved with our industry’s assistance but it must be substantial – and are we talking about this enough?

More than ten years after the recession, the Fintech revolution has completely changed the lending landscape but has also heavily influenced the old guard. Leasing brokers have in some respects been overshadowed by peer-to-peer platforms, challenger banks and lead aggregators.

We can ill afford to focus solely on sales-aid leasing. My brokerage has sought to remain a diverse one, offering financial facilities from equipment leasing, unsecured loans, property funding, as well as invoice factoring. Like many asset finance brokers, we have had to adapt and diversify our offerings or risk becoming stagnant and left behind.

Although lender and broker connections have always been solid, our view is that working as close together as possible – from a technical standpoint and a relationship level – is going to be vital in the long-term.

There will be challenges along the way, but the asset finance community remains resilient and we’re here to stay. The market will at some point contract again, rates will increase to more realistic levels and underwriting will get tighter. It’s important both lenders and brokers tackle these issues together as our partnership remains an ever-vital one in helping our SME clients to prosper.

NACFB | 45

Opinion

How can commercial brokers mitigate risk for their clients’ portfolios?

Darrell Walker Head of Sales InterBay Commercial (part of OneSavings Bank)

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n an ever-changing property landscape, landlords who are managing property portfolios are having to navigate choppy waters. Due to the current macro environment, rising costs and higher tax bills following the changes to mortgage interest tax relief, they are faced with the unenviable business decision of either increasing rents or cutting overheads.

Indeed, a recent survey conducted for Kent Reliance for Intermediaries, part of specialist lending group OneSavings Bank, found that 36% of residential landlords are already reducing or planning to reduce their spending – on average around 6% per property. Alongside this, one in five are looking at increasing the rents to cover the higher costs.

Against this environment, there have been many calls for landlords to consider diversification as part of their portfolio. Including a healthy mix of both commercial and residential properties sounds like a reasonable and prudent strategy but, as with any large financial investment, there are several things that landlords should consider when making the move into a different sector. And what role do you as brokers have in helping your clients navigate this?

What do brokers need to be advising their clients?

One of the greatest attractions to commercial property for investors is its exemption from the major tax changes that have hit residential Buy-to-let. Commercial property stamp duty rates are currently 46 | NACFB

capped at 5% over £250,000, while residential Stamp Duty Land Tax (SDLT) rates can reach 12% (on properties over £1,500,000).

Yet, like with all investing, commercial property is not risk-free and isn’t immune to the market trends. However, many types of property fall under the umbrella of commercial property – from retail centres to office spaces – and different factors will impact each. For example, while we’re witnessing the well-publicised demise of the high street, elsewhere there have been pockets of growth such as in the industrial and office sectors. Brokers who can advise their clients on the best sectors in which to invest will be a value-add to their clients.

The advice and expertise of a broker can be integral to clients looking to navigate the current market and seek out the best yielding properties and markets. My recommendation is for brokers to build relationships with a lender’s BDM who is best placed to inform them on product availability and appropriate criteria as well as offering flexible tailored advice. Not only will this help brokers to familiarise themselves with the products on offer, but it will also mean that if they encounter difficult cases, they’ll have a better understanding of which lender would be most suitable and able to help.

“

One of the greatest attractions to commercial property for investors is its exemption from the major tax changes that have hit residential Buy-to-let

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Opinion

Emotional intelligence can make the difference between success and failure The definition of leadership is evolving – with a greater emphasis on emotional intelligence

John Lightfoot Head of Relationship Management Ultimate Finance

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ommunication – it’s at the heart of every SME. Regardless of size, all businesses rely on strong communication to build relationships with partners and ensure excellent customer service. Mastering it is therefore key and it’s no exaggeration to say it can be the difference between success and failure.

I’ve seen that this is also true for commercial brokers that rely on effective communications to not only understand their customers’ cashflow issues but also to connect them with the right funding partner.

This is why I believe emotional intelligence (EI) is so important for brokers as it can make or break relationships with prospective and current clients.

48 | NACFB

What is emotional intelligence?

To me, EI is being aware of how I respond to different situations, controlling my response and expressing myself in the right way – it’s certainly had a positive impact on my work relationships.

Employing EI to interactions at work can be enormously beneficial for brokers who spend so much of their time speaking with SMEs in need of financial support. This is especially true given the variety of reasons businesses could need funding, from increased demand to unexpected machinery failure.

In my experience, the context of a conversation is key to its success – for example it may require a very different approach working with an SME in need of funding due to serious issues compared to one who is looking to scale-up operations.

Two steps to developing emotional intelligence I now apply EI to all communications I have with my team and clients and believe it’s made of two distinct areas:

1. Personal awareness – No matter how self-aware you or those around you think you are, personal awareness can be worked on over time. To develop it, I’ve found it’s worth asking yourself questions you may never have considered before – who and what pushes your buttons during the working day? How do you react when put under stress?

When faced with particularly stressful situations I’ve been known at times to begin making less considered decisions and start sending short emails to avoid work piling up. Others stick to the slow and steady approach but may feel physical changes, such as a feeling in the pit of their stomach. I now aim to step away for a short break to gather my thoughts, allowing me to question myself and take time to consider if I’m making the right decisions.

For brokers, there are times when clients are wound up, demanding, and pushing to get to a solution. Serving that client well is about taking the time to consider all options.

Sometimes that involves taking a step back to analyse the factors at play to ensure the right decision is made.

2. Social awareness – Given the importance of client communications, social awareness is a key skill to have.

Being aware of what pushes your colleagues’ or client’s buttons ensures you’re able to adapt appropriately to any situation. Trust can take years to build but seconds to break – one slip thanks to a lack of social awareness can undo months of relationship building.

One strategy I’ve used is to encourage regular feedback from colleagues, to discover perceptions of me, and how we are all working as a team. Taking this approach, you could discover that something you’re doing with the aim of supporting colleagues or clients, actually does more harm than good. Anonymous client feedback that highlights potential areas of improvement is just as beneficial, especially once changes have been made to rectify anything that had previously rubbed clients up the wrong way.

“

The context of a conversation is key to its success – for example it may require a very different approach working with an SME in need of funding due to serious issues compared to one who is looking to scale-up operations

Once the journey towards employing EI begins there can be a noticeable change in approach to challenging situations.

I’ve found that removing traditional agendas from the equation when attending meetings is hugely beneficial. Instead, I focus on what keeps clients awake at night and aim to resolve issues more far-reaching than cashflow worries. For example, if a client’s website isn’t performing, I will put them in touch with a company that specialises in exactly that. It’s beyond the traditional remit but resolves a problem the client is struggling with and often strengthens the relationship. This all comes back to EI – reading the situation and reacting accordingly, rather than pushing ahead without considering the wider context.

There are many ways to improve it – whether it be gaining feedback, analysing one’s own behaviour or even going on a course. There is no one size fits all but taking some time to invest in EI, can not only significantly improve internal communications, but also strengthen client relationships.

NACFB | 49

Opinion

Top slicing: using surplus income to meet a rental shortfall This method is proving popular among lenders as well as landlords and could help ensure fewer borrowers are denied access to finance Liza Campion Head of Key Accounts Precise Mortgages

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he introduction of new minimum underwriting standards for Buy-to-let mortgages by the Prudential Regulation Authority in January 2017 made it more challenging for landlords looking to purchase a new rental property.

Landlords now have to ensure they have sufficient rental income to cover an interest coverage ratio (ICR) that is typically 125% or 145%, which is there to ensure landlords can meet their tax liabilities and the ability to cover void periods. In addition, they are also subject to lenders’ prudential risk checks, which require loans to be stressed by a minimum interest rate of 5.5% on all Buy-to-let mortgage products of less than five years. As a result, landlords who use rental income from a single property alone can find it more difficult to demonstrate the ability to meet financial stresses and secure the loan size they need on the product they want.

To help landlords achieve the loan size and product type they want, at Precise Mortgages we allow top slicing. This means that, provided they have sufficient disposable income (this can include surplus portfolio rental income, earned disposable income, or a combination of the two) and the rental income on the property they are looking to purchase or remortgage meets a minimum 110% ICR calculated at pay rate, they can use surplus income to demonstrate they can meet any rental shortfall.

Top slicing is now available across our entire Buy-to-let range including to limited company and personal ownership landlords, whether they are portfolio or non-portfolio but is not open to First Time Buyers.

50 | NACFB

By taking a comprehensive view of customers’ circumstances, our improved top slicing proposition can provide landlords with greater flexibility around how they manage their portfolio. It can also provide improved access to two-year fixed rate mortgages when compared to underwriting which relies on the rental income of the property alone.

We’ve also made it easier to apply using top slicing by enhancing our DIP process. Brokers will no longer have to select top slicing as an option at the start of the process. Instead, the DIP will now automatically return a borrowing amount, including top slicing, when they select a product which is available to their customer.

What’s more, if their customer is only using surplus rental income from their portfolio to demonstrate the required rental cover ratio, we won’t need to see any additional proof of income.

In addition, if brokers find after submitting an application using rental income only that their customers’ circumstances change, they will be able to switch on to top slicing post-submission without the need to rekey the application as long as top slicing was available initially.

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Landlords who use rental income from a single property alone can find it more difficult to demonstrate the ability to meet financial stresses and secure the loan size they need on the product they want

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Listicle

10

obstacles to a successful deal Providing a lender with the right information upfront can save your deal

D’mitri Zaprzala Head of Sales Octopus Property

4. Confusion around land ownership Unregistered land, or confusion over who owns the land a property is on, can undo a deal. Recently, during one deal process, we found a report on title showed that a refurbishment had been completed on unregistered land. On another deal a strip of land that had to be crossed to access a new development (a ‘ransom strip’), was owned by a third-party, meaning at any time the owner could demand that no one cross it.

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ustomers with more complex cases, who need speed and flexibility, will turn to us as a specialist lender. But lenders can only move fast when they get all the correct information upfront to complete on a deal. This can also favourably influence deal terms.

Our deal analysis is thorough and ongoing.

While specialist lenders have more flexibility than banks, the range of tools we use is the same. We’ve compiled our top tips and common obstacles to successful deals.

2. Credit searches highlighting undisclosed adverse credit

All of these points reinforce the importance of telling lenders things which could affect a deal upfront. In doing this, brokers and borrowers are then likely to receive a fast, and hassle-free process to completion.

While specialist lenders do consider adverse factors such as missed secured payments and county court judgements, they need to be aware upfront. We run credit searches during the underwriting process and will identify any inconsistencies between the information provided and what we review on a credit file. Similarly, if we perform a renewed credit search later on, more recent activity will show up on the credit report.

1. Valuations not matching up with expected property value

3. Commitment from clients changing last minute

Borrowers sometimes overvalue their property and when we receive our independent valuation report, it’s worth much less than originally thought. We use a panel of third-party valuers with knowledge and experience of the property location.

This affects our loan-to-value criteria and can result in us reducing our gearing and the amount we can lend a borrower.

To be as efficient as possible, it’s helpful to get greater commitment from the borrower early in the deal process.

For example, we’ve seen a few deals where an equity partner has pulled out last minute due to problems with the title that have cropped up during the legal review.

This can create unnecessary work for brokers, lenders and solicitors.

52 | NACFB

7. Obstacles with existing lenders We always work to refinance existing lenders quickly and efficiently, but issues that aren’t declared on the application form can hold up a deal. One recent example includes us finding out that a borrower had a possession order from their current lender on the property.

We were able to work with this but arriving at the information late slowed down the deal.

8. Full asset description not supplied

“

All of these points reinforce the importance of telling lenders things which could affect a deal upfront

Lenders need a full description of an asset.

For example, we worked with a borrower who applied for funding to buy a flat. After visiting the property, we identified a bar with a late licence situated beneath it, which the borrower hadn’t told us about. In view of the impact on people in the vicinity, and the property’s value, we restricted loan-to-value terms.

5. Missing documentation or responsibilities under UK law Taking a deal through to completion includes closing gaps in the borrower’s documentation and transactions.

We recently worked with a client who owned several Buy-to-let properties on which they hadn’t maintained their landlord responsibilities under UK law.

They hadn’t provided tenants with copies of gas safety certificates before getting them to sign an Assured Shorthold Tenancy Agreement (AST).

6. No update on changes to works for refurbs and developments We know that property development is not always straightforward, which is why we move in line with borrowers’ changing requirements. But we need to be kept up-to-date on changes to works as they occur. It’s also imperative to have this information so that the borrower is on the right product with the best terms.

9. Lack of consent for proposed works We go into deals knowing we’ll need to work with multiple parties and meet everyone’s requirements. For deals to succeed, we need our partners to do the same. This includes having the freeholder’s consent for proposed works.

10. Lack of clarity around source of funds and deposit As a responsible lender, we need to understand and be comfortable with the client’s wealth and how this has accumulated. We may ask for supporting documents to help build that picture.

Finding out that the client’s deposit has come from a different source than originally thought can delay or even lead to a deal being declined.

NACFB | 53

Five Minutes With

​ ive F Minutes with: Jennifer Enright Jennifer Enright Deputy Head – Customer Experience Hitachi Capital Business Finance

Describe your role in ten words or less?

Delivering exceptional customer service throughout our operations team.

In your view what are the key elements to a successful deal?

Getting all the correct information first time round makes deals fly through the process – and this helps us and the customer. Ensuring that we have open lines of communication if there are any missing bits helps to ensure a smooth pay-out.

What recent professional accomplishment are you most proud of?

I was on the pilot of our mentoring scheme which encourages everyone, particularly women in the business to develop and grow their mindset and ability to achieve their ambitions – I found it extremely rewarding and it helped me grow my network across HCUK and gave me confidence to grow with the business.

54 | NACFB

What’s the most common reason for turning away a deal?

If you were to start your own small business, what would it sell?

Our credit team look at each deal carefully however HCBF have some standard conditions that need to be met such as three years' trading and a clear credit history – it tends to be these reasons rather than asset type that means a deal doesn’t get written.

I saw a great deal for gin distillery equipment last week and thought that in another life that would be for me!

If there was an Olympics for everyday activities, what activity would you have a good chance at winning a medal in?

Juggling – being a mum to two under tens and looking after five different teams at work means there’s always more than one ball in the air – the trick is not to drop any!

What is your favourite SME success story?

EFG deal for Goodness Baked – helped them to get their Christmas puddings to the supermarket in time and in bulk for main trading time.

What advice do you have for the modern commercial finance broker?

Embrace technology – the commercial finance world is continually changing and adapting to new systems and ways of working, however we need to remember that the industry is built on relationships and these are pivotal to the success of a broker funder relationship.

If you could have dinner with anyone from history, who would it be?

Emmeline Pankhurst – achieving what she did in an era where women’s rights didn’t even make the agenda was truly great and I’d love to understand some of the trials she went through.

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