A collaborative working agreement between the National Association of Commercial Finance Brokers (NACFB), Towergate Insurance and Funding Circle, means that NACFB members can now arrange an unrestricted number of commercial loans with peer-to-peer lenders without jeopardising their insurance cover.
Under the terms of the trade body’s membership, NACFB brokers must have professional indemnity insurance which covers them against claims of mis-selling from clients. Until this month, however, insurance companies had restricted the amount of business commercial finance brokers could place with peer-to-peer lenders for their cover to stay valid.
NACFB chairman Paul Goodman explains: “Peer-to-peer lenders came onto the market at the same time as payday lenders, and some insurers had confused the two. There was a perception that peer-to-peer lenders placed onerous terms and conditions on how the loans should be repaid, and that this would make commercial finance brokers vulnerable to charges of mis-selling. “This left commercial finance brokers having to choose between growing with this booming part of the market and the security of legal and financial backing if they were to face legal action from a client. Following a milestone meeting with the NACFB, broker Towergate Insurance which arranges the NACFB’s exclusive members’ cover, leading Lloyd’s of London insurer Beazley and Funding Circle, a leading peer-to-peer lender, NACFB’s cover now contains no restrictions.
“This makes NACFB’s exclusive cover the only policy in the market specifically designed for commercial finance brokers which covers an unlimited amount of brokered loans with peer-to-peer lenders. Peer-to-peer lending is booming and it’s fantastic that our members can now use it as much as they like, safe in the knowledge that they enjoy protection arranged by NACFB Insurance Services.”
Funding Circle’s Neil Mullane said: “Peer-to-peer lending through Funding Circle in the UK has so far seen 58,755 investors lend over £2bn to British businesses. We are delighted that the insurance market has recognised we provide businesses and finance brokers a greater choice beyond the traditional lenders, with flexible terms and no repayment fees.”