With thousands of unregulated commercial brokers in the UK alone, how do investors find a good broker in today’s market? Jason Mendelson, Managing Director of IntaCapital Swiss plc, a UK regulated funded solutions provider tells us what he thinks investors should look for when choosing a finance broker.
Looking for a broker can be hard especially in a market where many of the lending activities fall outside of regulation and therefore there is no requirement for a regulated broker. However, at IntaCapital Swiss working with the National Association of Commercial Finance Brokers (NACFB) we are beginning to formulate some guidance for those looking to engage a broker.
There will always be a demand, but there is currently little consistent supply
There will always be a need for finance, a need to build a strong economy regardless of the political or economic market. There may be a hiatus at times with Brexit fears but whatever happens, businesses will still need cash and funding.
Although we believe that there will always be a demand for finance, we want to ensure there is a credible, and consistent, supply of brokers and providers. To build a strong economy we need a credible pathway for those looking to invest, of companies who can give them options for the best financial solutions for their investment and those who can provide robust investment opportunities.
Always choose a broker or introducer that is regulated, or registered with a regulated body
Joining an association or body is a clear message that you adhere to certain standards and codes of practice. This is one reason why at IntaCapital Swiss we have welcomed this move towards regulation and have taken the steps to register ourselves with the National Association of Commercial Financial Brokers in the UK. At the NACFB each member, regardless of their regulated status is measured against the NACFB’s minimum standards. This has led to a dramatic increase in FCA regulated brokers in the commercial space, highlighting the fact that brokers are aiming to meet standards, to do the right thing, maintain a robust compliance framework alongside demonstrable ethics and cultures.
However, it is not as clear-cut as some might think and it is important to understand that there are brokers who only deal with clients who are currently unregulated. A good example is where the borrower is a limited company. If the broker only works in this space, there is evidence to suggest that even if the broker applies for FCA permissions they will not be granted because they are not required.
It is therefore not as simple as saying deal only with a regulated broker for the best and safest service. Let us also appreciate that the client is unlikely to know the subtleties of FCA permissions. They just want some help sourcing commercial finance from a knowledgeable and trusted person. However, it is worth noting that if your broker is regulated they will need to clearly define their strategies and continue with their obligation to be regulated.
Being regulated not only helps protect the investor but also offers a level of comfort to the broker.
All regulated brokers go through a rigorous induction process that helps them understand their commitments and standards of practice. It is also likely that joining an association such as the NACFB they will hold a data protection licence and public liability insurance, which will protect not only their clients, but their own company too.
It also means that if your broker is regulated or registered with an association they will have a network of other professionals beside them to collaborate and collectively understand the nuances and complexities of the market they are working within, even though they might be working alone.
Regulated brokers tend to be the chosen partners for other financial institutions
Regulated brokers will also be more likely to be part of a network of bankers, lenders and other financial institutions as a general rule of thumb, only regulated brokers offer whole market advice and therefore tend to be the chosen partners for others in the financial sector.
Over recent years as the mortgage arena started to become regulated, the commercial sector has changed dramatically with various high street bankers having to restructure and the typical bank manager disappearing. The usual high street brand you would expect to see RBS, Natwest, Barclays, HSBC and Lloyds are now keen to collaborate with authorised brokers and work collaboratively.
Again the broker will have to go through a vetting process by each bank to be approved to be on the banks panel. The broker will also be remunerated by the banker, which will have a knock on benefit for the borrower as this can be offset against the broker’s charges that the client would normally pay.
Less inherent risks
As a result there are likely to be more inherent risks for customers who deal with non-regulated brokers who are not authorised and therefore not bound by quality control standards laid down by the regulator. For those whose scope of work are not covered by regulated bodies, look at examples from the NACFB’sUnregulated Business Members Practice Policy that brings a level of reassurance that the company is looking to adhere to good practice.
Look at the broker’s reputation and history
You have every right to ask about your broker’s history and reputation before you entrust them to work on your behalf. Check how long they have been established, how long they have been members of a regulated body or registered with industry associations. Ask what other clients they have and in what sectors and industries. Although they shouldn’t be able to give you details and information about specific deals they have undertaken on behalf of other clients, they should be able to advise on certain sectors and be able to prove that they understand the market you operate in.
Ask for transparency, especially when it comes to charges
Making sure you get the best charges is always going to be key to working with any broker. However, like in any industry, the cheapest doesn’t always equate with the best deal. Ensuring that you get the best outcome for you or your business means looking at the right charge and exploring exactly what you get for that charge. Ask for the details and only use brokers that will give you transparency about their charges. At IntaCapital Swiss we always provide our clients and customers with full advance terms and conditions to ensure that all charges and fees are agreed upfront. It is also worth noting that if you opt to use an unregulated broker, you have no recourse if you are badly advised or charged extortionate fees.
The key for the investor is to find a broker who has their best interests at heart and who is trusted to act in a way that delivers the best outcomes for them.
Jason Mendelson is the Managing Director of IntaCapital Swiss UK, a boutique finance company encompassing over 150 years of experience to offer clients exclusive, modern and dynamic funding facilities.
AI: CUSTOMER FACING EMPLOYEES’ BEST FRIEND IN THE FINANCIAL SERVICES INDUSTRY
By Ryan Lester, Senior Director, Customer Experience Technologies at LogMeIn
We’ve all heard the old saying “money talks.” Well when it comes to customer loyalty and retention, good customer experience talks much louder, with 30% of customers leaving a brand and never returning due to a bad experience.
The truth is, there are a lot of companies with similar products and services, but that doesn’t mean that differentiation is impossible. So, what’s the solution? For financial services, large and small, customer experience is becoming the key competitive differentiator and the best way to deliver an impactful experience is to empower customer-facing employees to do their best work. Artificial intelligence (AI) is enabling these employees to create remarkably better customer experiences, resulting in customer loyalty, advocacy, and overall growth.
For financial institutions that have been considering new strategies for improving the quality and efficiency of their customer experience, here are a few ways AI can enable them to deliver the “human factor” that good customer experience demands whilst ensuring customer facing employees can provide a more positive experience for customers.
Increase employee productivity
How much of employees’ time is spent searching for answers to questions? Do they ever have to put customers on hold or even step away to get additional help? AI helps provide front-line employees real-time guidance so they can spend less time looking for information and more time solving problems. An AI-powered chatbot, for example, can be listening in the background of a conversation helping point employees to the right data, solutions, and processes to resolve customer issues faster than ever before.
Deliver a consistent customer experience
When banking customers engage with their financial institutions, they measure the speed and accuracy of the service through two criteria. First, how quickly can the system access their account and deliver the correct information? Is it faster than a human could type it in and share it? And second, if they eventually do need to be connected to a live customer support agent, is their information captured and passed along accurately? AI technology takes those general queries off the customer support team’s plate, providing a quick, accurate, and effective response. If a query needs a more in-depth response, AI can hand it off to support staff to address.
Not only this but leveraging a centralised, AI-powered knowledge solution ensures every employee has access to the same, updated information, so no matter who the customer speaks to, they can be assured that employee responses are both consistent and accurate across the board.
Accelerating employee training and onboarding
Like any industry, employee turnover is inevitable and can be costly. But, not training new employees correctly or in a timely manner could be much more costly. When it comes to financial services there is a lot to learn, whether it is something simple like the process for checking an account balance to all the nuances associated with mortgage loans. AI can support on-the-job training by helping new employees answer questions confidently, correctly, and much quicker than they could before.
Improving employee satisfaction
Today’s banking customer has all kinds of new ideas about their banking experience. “The Amazon Effect” has successfully raised consumer expectations to the extent that a consistent, personal, and relevant experience is the new normal. As a customer, how many times have you been told “I’m sorry, I don’t know the answer?” Customers want solutions to their problems and employees want to be able to deliver those solutions as efficiently and effectively as possible. AI assisting in the background helps minimise those negative moments – making employees job easier, less stressful, and overall more enjoyable.
Identify knowledge gaps
Do you know all the questions employees are getting asked? Do you know what’s easily answered and what’s not? Real-time insights allow knowledge managers to keep up to date on frequently asked questions and gaps in current resources. This allows them to strategically improve or add content where needed.
Augmenting customer service
Whether talking with an AI chatbot or a personable customer service team member, the modern banking customer has high expectations for convenience, speed, and security. Which means that the technology you choose to deploy and how you deploy it is now just as important as who you hire and how you train them.
Today’s AI solutions won’t replace customer service agents or get in the way of the human factors that drive the customer experience. On the contrary, they augment it, allowing the business to do more without adding human resources. The higher the quality of a AI chatbot solution, the better it will be at taking the routine requests off the plate of customer service agents—giving them more time to provide a personalized and positive experience for customers.
TIPS TO PROTECT YOUR CASHFLOW DURING THE COVID-19 PANDEMIC
By Rita Cool, Certified Financial Planner at Alexander Forbes Financial Planning Consultants
The full impact of the COVID-19 pandemic is as yet unknown, but individuals have already begun to have their lives disrupted by the country’s economic shutdown, with retrenchments, salary cuts and forced unpaid leave making them take stock of their financial position.
The basic principles of financial planning are especially relevant at this time, but in the short term, cash flow is more important to many people.
To help safeguard you and your family’s financial security, here are some tips to follow to make sure you’re making your money work hard for you:
- Draw up a budget – this is especially relevant if you’re worried about possible retrenchment of yourself or your partner. This will help you know how much you need to cover your basic living expenses and where you can save money. Don’t only look at what you need to spend money on, but also when you think you will need that money. Perhaps you paid school fees upfront at the beginning of the year, or your car registration is only due again next year.
- Check your bank fees. Are you in the best structure for your needs? Are you paying for services that you never use? Consider moving banks to get a better deal.
- Banks have waived the Saswitch fee payable for withdrawing cash at another ATM other than your own bank, but if you’re doing this, be aware of when this switches back as you can end up paying almost double the bank fees.
- Did you know that you start paying interest immediately if you draw cash from a credit card and that you do not get three or six months’ interest free?
- Go through your house while you have extra time and identify potential items which you could sell, as this will free up cash.
- Where possible, pay cash for items as the interest rate on hire purchase items is very high and you pay around 20% more for those items than the sticker price. If you cannot afford the item and you don’t need it right now, wait.
- Look around for bargains online rather than driving around. There are some good sales on, and you can support businesses that need your help.
- At the same time, be aware of spending extra cash you could be saving towards your financial safety net. There are lots of deals available, so balance the need for the 70% off bikini or new laptop with being cautious about the future.
- Use store coupons and discount vouchers. The main food retailers have loyalty programme structures that can be tailored to your specific spending patterns. Make sure you claim point or vouchers but look out for monthly costs to belong to a rewards program. Ask yourself if your monthly savings validate the cost. Optimally a reward scheme shouldn’t cost you money.
- Check with your insurance company if your premium can be reduced because you’re driving less during lockdown.
- Check your current insurances. Do an insurance rebroke. Make sure you are covered for what you need and take things off the list that you do not have any more and add what you have bought since the last update. Make sure you are not under or over insured and that your premium is market related. The cheapest premium isn’t always the best so be aware of exclusions and excesses and make sure you can afford the excess if you need to claim.
- In most cases you can reduce your monthly insurance premiums by not having a cash pay-out in the future. If you want a pay-out, save the extra premium in an investment product, not a risk product.
- Be wary of consolidating debt. You might pay a lower interest rate but it might well be over a longer period so the total interest paid will be higher. If you have debt issues, set up a debt plan with dates and goals to reduce the debt little by little. Do not give up.
- Be aware that payment holidays are not a free loan, you still owe the money and you’re paying interest on it. Check with your service provider.
Remember that the pandemic will pass. Try not to panic as this may lead to rash financial decisions, which could have an impact on your finances later down the line.
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