Why regulation and compliance should matter to your business
Regulation can often feel unnecessary or frustrating when you’re running a busy firm, but when it comes to financial regulation there are good reasons why it’s in place to protect you, your business and the wider economy.
Complete Commercial Finance, appointed representative of AFS Compliance Ltd
While most of us are familiar with consumer financial protections to ensure fair and responsible treatment when buying or using financial services, the business-to-business (B2B) sector has been playing catch-up over the past two decades since the Financial Conduct Authority (FCA) came into place in 2013 to regulate and supervise around 41,000 UK firms.
Complete Commercial Finance in an independent finance broker and an appointed representative (AR) of AFS Compliance Ltd, which is authorised and regulated by the FCA. Iain Griffin is one of AFS Compliance’s four regional conduct officers and ensures brokers such as Complete Commercial Finance operate within the boundaries set out by the FCA.
Its systems ensure all quotes that Complete Commercial Finance provides are compliant with regulations, and Iain undertakes an annual audit of the company to check the business is operating correctly and follows industry regulations. AFS Compliance also provides updates and training to ensure that its ARs are up to date on new regulations and changes effected by court cases.
The future of regulation for business finance
“AFS Compliance is one of the UK’s biggest broker networks creating a link between lenders and brokers who organise business finance,” says Iain. “We are authorised by the FCA and our ARs have to comply with the regulations set out by the authority.
“Complete Commercial Finance is one of our franchisees and, as part of the arrangement between the two companies, we monitor its business. If new regulations come in from the FCA we have to change the way we run things to ensure our ARs comply with these rules.
“Typically these type of changes come into effect once a year, but there might also be a court case, such as the Court of Appeal’s ruling against discretionary commissions in October 2024, which makes it unlawful for brokers to receive a commission of any kind from lenders providing motor finance, without the customer’s informed consent.
“When the ruling was announced, all lenders stopped this type of lending for a week to update and ensure its processes and documentation reflected the new regulations. Following the ruling, all ARs now have to disclose their commissions to clients who must sign a form to say they are happy for the broker to receive this payment. We had to change our systems and train ARs to ensure they are aware and know what to do following the new regulations.
“These type of changes gives customers confidence that there is a body behind and protecting them, and ensure the charges for providing finance are transparent and fair. As one of the UK’s largest broker networks, we can often see what’s coming down the line and are able to help our franchisees to get ahead and be ready for changes so they are prepared.
“For example, the FCA has said it will look at lending to micro-businesses, which may come under the consumer umbrella of protections in the future. However, recently there has been a slight softening by the FCA as it needs to grow the economy and enable business to take place, so this may be delayed. It’s a balancing act to ensure that people are protected while looking at the wider impact on the UK’s economy.”
AFS Compliance, supporting a global network
As part of the AFS Compliance network Complete Commercial Finance is able to work with an extensive range of lenders including specialist providers offering solutions for complex or unusual applications. “ARs are intermediaries,” says Iain, “and we enable them to interact with our lenders, each of which have commercial broker managers who can help to process deals if required. A broker’s jobs is to match the customer and the asset being purchased to an appropriate lender to provide a finance solution that suits both parties.
“We’ve invested in systems which all ARs use to capture details and has built-in compliance. This sends information to customers regarding the data it holds about them, to comply with GDPR, and details of commissions, so everything is captured accurately and provides complete transparency. We use a global communication system to provide regular briefings for ARs, and brokers can also ask questions of each other which is a real asset to help with challenging applications.
“We are a strong broker group which looks after its ARs in many ways, such as with our systems, compliance and marketing support. We keep our brokers on track, aware of new regulations and keep an eye on how they do business to ensure they are compliant, and if something does happen we are there to action it straight away and take care of things. Together, we’re stronger and working with a broker which chooses to work within this type of framework to ensure they are compliant should be a huge reassurance for any business seeking commercial finance.”
