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It’s time to rethink asset finance broker FCA compliance reviews

Over the summer, many asset finance brokers have received one or more thuds on their doorsteps - or the email equivalent - being annual compliance review paperwork from their funder partners. It’s not completely new, but more lenders are starting to do this, and some of the questionnaires are getting longer and longer.

To be fair to lenders, they are caught between a rock and a hard place. They don’t want to make life difficult for brokers (although seeing one of the questionnaires, I have to wonder) but bank owned lessors in particular are facing increasing pressure (directly, or more often indirectly via the banks’ internal audit functions) from the FCA or the PRA to demonstrate they have strong introducer controls in place.

It’s becoming a lot of work for everyone, and it mostly isn’t contributing to good regulatory outcomes:

  • Brokers have to spend considerable time finding boilerplate regulatory policies that are often of very limited relevance to their businesses, reducing the time they can spend supporting their small business customers.

  • Faced with inconsistent or conflicting advice and requirements from lenders on what they should tell customers about their role and how they are paid, brokers are forced to wait until the lender is selected rather than issuing this key information when they first speak to new customers, as the FCA regulation suggests should happen.

  • Lenders are sent piles of different versions of bland narrative and mostly irrelevant policies, and somehow have to decide what is acceptable and what isn’t.

There’s at least a partial solution, which is that several broker channel lenders support the distribution of a single set of model compliance materials for asset finance brokers. This could include:

  • A model broker disclosure sheet, so the broker can explain their role to a new customer before they select a lender. Many brokers are still using the ‘pre-contract disclosure’ sheet that Hitachi supported in 2015 and was then adopted by Aldermore. It has served the industry and customers well (OK, I’m biased!) but it needs some attention now.

  • A set of model regulatory policies - including treating customers fairly, vulnerable customers, data protection, complaints: short documents that really get to the heart of what the regulation is intended to achieve in the specific context of asset finance broking.

  • Access to free or low cost basic annual training updates to ensure regulatory knowledge is kept up to date and firms adopt best practices to benefit their customers.

This sort of thing is complicated to agree at industry level, but what could work well is for a small group of forward thinking lenders to lead the way. Their intention wouldn’t be to create the ‘perfect’ solution to regulatory compliance (partly because there’s no such thing) but rather to offer a starting point for brokers to adapt to fit their businesses.

First versions all of the model documents could be developed fairly quickly, with improvements being made over time as more firms get involved. The payoff would be improved regulatory outcomes, protecting customer service and avoiding unnecessary costs.

It’s time for the right calls to be made before these compliance reviews start to harm to the sector and precisely what the policy and regulation is there to protect: firms acting with skill, care and integrity to help businesses get the finance they need.

For more commentary on the asset finance broking market, please see my main blog page at For other resources including the Asset Finance 500 brokers directory, see

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