CFI: NACFB


NACFB gala dinner bookings exceed last year’s


The uptake for the NACFB’s Gala Dinner and AGM on No- vember 24th has been very high. With two months to go, the association has already re- ceived 420 bookings and has already overtaken last year’s attendance levels. The AGM held on the same


day will also give the mem- bership the opportunity to choose their new board for


2012 as well as to the chance to voice their opinions on the main priorities for the year ahead. The popular networking


lunch will also take place dur- ing the day and will allow members to liaise with over 30 NACFB funders active in the market as well as the op- portunity to discuss deals. The evening’s event will


also host the awards ceremo- ny which gives our lenders a great insight into whether they are providing the servic- es required for our member- ship by rewarding the key players for their efforts over the year. The entertainment line up


is also superb, with music from 70s band, The Real Thing, famous for hits such as


You To Me Are Everything. The evening’s comedy will come from Simon Evans who has supported Michael McIntyre and has written with the likes of Dara O’ Brian. Simon has also appeared several times at the Edinburgh festival and appeared regularly on BBC 4 radio in the Charm Offensive by Armando Ianucci and the News Quiz.


Mis-sold interest rate protection headache for SMEs


SMEs have a variety of woes at the moment, particularly securing funding from main- stream lenders but some have also been caught out by mis- sold interest rate protection or swaps as they are known. So, what are the implications of mis-sold schemes on the SME market? Interest rate protection was designed to protect the bor- rower from fl uctuations in interest rates - particularly useful for SMEs looking to eliminate risks of rising inter- est rates on their borrowings. If interest rates rose the bank would cover the increase for the client and if the rate fell, the client would pay a fee back to the bank. In princi- pal, the concept should have helped borrowers balance the risk of interest rate rises – many of these schemes were sold in a time when rates were indeed rising.


Now in a time of histori-


cally low interest rates, the swaps are causing consider- able problems for borrowers and SMEs that adopted the schemes. The issue of wheth- er these swaps should have been sold so freely has be- come a big talking point and the source of another major potential headache for the banking industry. Some have argued that the


major banking institutions that sold these schemes also failed to emphasise the po- tential risks involved such as the consequences of a fall in interest rates and the large exit fees involved in terminat- ing the schemes. Secondly, it is claimed that


there was a huge pressure on the staff to sell these schemes which led to them being sold to amateur investors that did not have the experience to understand the complexities


“Some have argued that the major banking in- stitutions that sold these schemes also failed to emphasise the potential risks involved such as the consequences of a fall in interest rates and the large exit fees involved in terminating the schemes”


involved and created an at- mosphere which encouraged staff to fl out guidelines. As mentioned earlier, many of these swaps were sold in a


time of rising interest rates, so the prospect of rates falling to their present rates would have seemed quite remote. With interest rates now at an historic low, many clients are now struggling to pay the fees that are involved. It is clear that mis-sold in-


terest rate protection could have a severe impact on SMEs. SMEs are struggling considerably to access fund- ing in the current market, so additional problems from in- appropriate or in some cases, ill-advised schemes such as swaps are certainly not a welcome prospect in the in- dustry. It is claimed that mis- sold interest rate protection has led to many fi rms going in to administration thanks to the fees levied or the high exit fees involved in the swaps and this is certainly some- thing the smaller fi rms could do without.


A new service from the NACFB, launching 1st September MORTGAGE INTRODUCER OCTOBER 2011 55


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