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Debating conduct and regulation at Asset Finance Connect’s Summer 2024 Conference

County Hall

We were told regulatory and ombudsman interventions would take centre stage at the Asset Finance Connect (AFC) summer conference last week at AFC’s new County Hall venue, and they certainly did. Was the stage set for a constructive debate?  And did delegates leave better positioned to manage their firms?

Here’s my take on it covering only asset finance regulation - a small part of the overall conference proceedings - and very much my own views rather than a full report of the discussion.

Personal guarantees

In the opening session, guest Martin McTague, national chair of the Federation of Small Businesses (FSB), explained the thinking behind the FSB’s ‘super-complaint’ to the Financial Conduct Authority on banks’ requirements for personal guarantees (PG) from company directors when offering loans.

The industry panel provided a highly courteous and well-informed response, warning of the dangers of unintended consequences. True, there was an element (not entirely unreasonably) of ‘It’s not us gov, it’s the other sectors’ but that was countered by openness about when PGs are used within asset finance.

In the absence of research (the FSB itself calls its evidence of problems ‘anecdotal’) we can debate whether it acts as a barrier to business investment. But the risk - however small - of losing their home must weigh on the minds of at least some SME directors on bad days for the business.

All the FSB seems to expect is for lenders to refine their PG requirements, perhaps fine-tuning when PGs are required, their scope and duration, if these matters haven’t been reviewed for some time.

It’s unfortunate and even somewhat mystifying the FSB felt a need to make the super-complaint - and unclear what meetings they had with the financial sector before doing so. But kudos to AFC for arranging this engagement with our sector now and facilitating such a good-humoured and informative discussion.

Claims Management Companies

As if inviting the FSB to discuss its super-complaint wasn’t enough of a poisoned chalice, the conference then went straight on to an interview with Simon Evans, managing director of the Consumer Redress Association, which represents claims management companies that are now encouraging consumers to raise claims against the industry for hidden commissions.

Again, the Conference listened to the guest’s point of view with respect. It’s difficult to dispute that CMCs can provide a useful service for some consumers. When they do their job well (and, of course, this is far from a given) they also help to enforce a well-functioning finance market.

Mr Evans was not virulent about the motor finance industry or its conduct. Like motor finance lenders, CMCs are waiting for FCA conclusions to find out what their role will be (albeit in the meantime doing their best to stir consumers to raise complaints).

The CRA doesn’t appear to be expecting a ‘one size fits all’ mass redress programme any more than it is expecting there to be no redress. That sounds right to me. This isn’t about winning or losing against the FCA and FOS, it’s about defining the scale of the problem.

The use of discretionary commissions did not automatically mean the customer lost out. In most cases, they could well have paid less than if an alternative way of paying the broker or dealer had been in place.

Regardless of the judicial review outcome, somehow the FCA is going to have to navigate its way to a fair solution for all, permitting firms to justify paying higher commissions where this reflected costs. It’s more of an accounting dispute than a legal one.

If the CRA members eventually have a useful role in implementing what the FCA comes up with, then we are right to be engaging with them. Hopefully it will prove not to be necessary on a significant scale, but it’s useful to know the door is open for cooperation.

Broker commission disclosure

The closing debate of the conference was whether broker commission disclosure (that is the actual amount of commission) should be required.  Many arguments were given, but there was frustration among brokers about the principles and practicalities of what was being discussed.

The FCA requires the existing commission disclosure for regulated agreements (that doesn’t require the amount of commission earned, and the FCA hasn’t indicated it plans to change this) to be given ‘in good time’.

The logic is that the customer can then make a more informed decision whether to use the broker. If the disclosure is not ‘in good time’ (presumably towards the end of the process, which is often when the commission amount is finalised) that’s less useful information for the customer. By then, it would be difficult for them to re-start their search for finance.  

It can help to debate two extremes, but it would seem more useful to then discuss practical options that lenders might implement. On this topic, ‘full disclosure’ of the value of the commission seems to be no more an option than doing nothing.

The morning session on PGs gave delegates ideas on how to fine-tune their PG policies. Lenders also need some ideas for how to fine-tune what they could require brokers to disclose on commissions while keeping the disclosure ‘in good time’ - such as providing the typical amount the broker will earn, or a range.


This was another excellent AFC conference. Overall the important and sensitive regulation-related subjects were handled very well, alongside many other important topics in both plenary and breakout sessions.

Our trade associations represent the industry with policy makers and develop industry-wide best practices. But from time to time, debating regulatory issues in a more open forum with wide participation from across the industry is valuable. The AFC conference, supported by its members and sponsors, delivered exactly that.

The third edition of the A to Z of Leasing and Asset FInance will be published soon. For details of this and other resources for the asset finance industry, see

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