CFI: NACFB


NACFB responding to OFT consultation paper


on the 1st June the office of Fair trading issued an important statement con- centrating on a response to a super complaint from the citizens’ advice Bureau. although it was directed


at the protection of vulner- able consumers in the sub- prime unsecured credit bro- kerage market, it could have wider implications for the market as a whole. the state- ment deserves careful read- ing by commercial finance brokers.


Whether they operate in


the regulated agreement market or not as it states that legislation is being sought in order to address the prob- lem – including “a possible ban on upfront fees”. Secondly, but importantly,


the statement also refers to a consultation document which updates oFt guid- ance on the principles of credit brokerage. the consultation docu-


ment is being currently be- ing studied by the national association of commercial Finance Brokers with a view to advising members, as well as presenting a response back to the oFt on this consultative document.


Fees charged although focusing on the statutory position (S 155 of the consumer credit act) these pages represent


a timely update on the principles of fee charg- ing and the circumstances in which refunds must be made – it includes refer- ence to Hurstanger (already included in the model nacFB terms of Business agreement). nacFB code of Practice


rules 2.2 and 2.17 state that a member shall “not pro- pose to a client terms and conditions which (applying standards recommended by the association from time to time) are anything other than fair and reasonable” and that a member shall “avoid the charging….of any commission or other pay- ment which might be per- ceived………to be excessive or incompatible with the prevailing terms of business normally applied in the in- dustry”. exceptionally a higher


rate may be charged where the member reasonably be- lieves that additional work to that normally applicable will be involved, provided the supplemental charge proposed is proportionate, and fair to the client, and that the client is fully in- formed by the member of the reasons, before he signs the terms of business agree- ment. the overriding principle,


which, where applicable, should also reflect consider-


ation of the Hurstanger rul- ing, is that a member should apply charges which are fair, reasonable and proportion- ate to the facility to be nego- tiated, and the work antici- pated – and within the above guidelines, which will be ap- plied in the consideration of any complaint. Whatever the outcome of


the consultative process, the practice of charging non- refundable commitment or appraisal fees unfairly or without a reasonable pros- pect of securing the facility sought will continue to be condemned, and sanctioned through its code of practice, by the nacFB.


Fair business practice in the consultation paper, these broadly reflect the principles already embed- ded in the nacFB code of practice and reinforce the importance of transparency and fairness in the business dealings of its members. this summary is not in-


tended to be a detailed com- mentary. it is in the early days of a consultation peri- od (ending on the 23 august 2011) and is currently being studied with a view, if ap- propriate, to issuing a more comprehensive statement. it does however highlight


and reinforce the nacFB’s determination to demon- strate the principles of good


business practice, transpar- ency and fairness carried out by its membership. We have made early con-


tact with the oFt to indi- cate our willingness to pro- vide a timely response to the proposals.


Banks in stronger shape than previously


thought the latest Bank of england reports states that Britain’s banks are repaying the state loans more swiftly than pre- viously thought, indicating that they are in stronger shape than widely believed. Banks that received gov-


ernment bail outs were given three years in which to repay the loans. the re- port states that £148bn of the £185bn borrowed has already been paid since the credit crunch first occurred in 2007. the remaining fig- ure to be paid now stands at £37bn. despite the swifter than


anticipated repayment of the loan, the banks have still fallen short on their lending targets set by Project merlin. the banks have pledged to boost lending to businesses by £190bn.


mortgage introducer JULY 2011 59


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