Omega: The ‘R’ Word

During a Q&A event at which I was part of the panel, one very good question was asked: ‘Is our industry (i.e. commercial finance) ready for regulation?’


Which started me thinking (it was either that or the static shock I got from the nylon carpet).

I can’t speak for all brokers but can form an opinion based on Omega (our own brokerage), other brokers I know sufficiently well, and also on the code of practice and principles we all follow.

Let’s start by looking at what regulation actually is (or should be):

In its most basic form, financial services regulation is a commendable set of rules designed to ensure everyone under their governance acts responsibly and in the best interests of clients. Yes, it’s often clouded by (sometimes huge) bureaucracy and paperwork sufficient to cause palpitations in eco-conscious individuals through its impact on the rain forests, but in terms of what regulation is designed for, I believe the above description is pretty accurate.

Perhaps we should consider what I believe are the basic building blocks to meet regulatory requirements (in no particular order):

  • Acting in clients’ best interest at all times
  • Demonstrable competence and knowledge
  • Diligence
  • Service
  • Transparency

So, do most commercial brokers fulfil these?

I suspect most do. I know Omega does, for the following reasons:

  • The majority of dedicated commercial brokers, like Omega, follow some form of laid down code of practice, for example the NACFB or AOBP versions.
  • Complete transparency on fees.
  • Our brokers are ex-lenders themselves with backgrounds in various commercial finance institutions, so they had those behaviours ground in over many years.
  • Our subscription to the principles of TCF.

I do have a caveat though, regarding some broker firms: that of demonstrable competence and knowledge.

Doing something regularly or for a long time doesn’t automatically make you good at it – I have dieted constantly for over 10 years, but as many of my peers know I am far from competent!

I believe the only way for brokers to demonstrate knowledge, expertise, and therefore competence, is by way of achieving and maintaining both some form of current commercial qualifications and also their CPD.

At the risk of upsetting many of the older established commercial brokers out there (including Omega’s CEO), I don’t believe Institute of Bankers’ qualifications from 20+ years ago sufficiently provides this in isolation. Whilst they provided much education on legal, security and banking principles, accounting practice et al, by definition some of that information is now out of date.

I fully acknowledge that brokers who have practised in the intervening time have certainly kept up their current knowledge in these areas; however, we get back to the old chestnut of evidencing that current knowledge.

I therefore applaud both the existing Certificate in Business Banking and Conduct from the NACFB and the potential bridging qualification from the AOBP.

Any commercial brokers out there who haven’t obtained some form of current qualifications should in my view do so ASAP. To those who have yet to apply for their full CCL permission from the FCA, I suspect having some form of current qualifications will go a long way to meeting several of the requirements in the ‘fit and proper’ category.

So, the much shorter answer to the question ‘is our industry ready for regulation?

Yes, for dedicated commercial brokers who do all the right things: follow a code of practice and principles laid down by relevant professional bodies, keep detailed records of what you do and why, have sufficient commercial professional indemnity cover and take some form of up to date qualification.

Given that brokering is now regulated to a large degree already by the CCL changes, if anyone out there can’t adopt or follow these practices, their best interests may be in using a commercial broker who does…

By David Sampson of Omega Commercial Solutions 

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