COMMERCIAL brokers have been granted more scope to sell peer-to-peer loans to their clients, after their main trade body clinched a deal with Towergate Insurance and Funding Circle.
The National Association of Commercial Finance Brokers (NACFB) announced on Monday that its insurance partner Towergate Insurance has lifted the cap on how many P2P loans brokers can arrange for their clients.
Under the terms of the trade body’s membership, brokers must have professional indemnity insurance which covers them against claims of mis-selling from clients.
Towergate Insurance and other insurance companies had set restrictions on how much business commercial finance brokers could place with P2P lenders for their cover to stay valid.
“Peer-to-peer lenders came onto the market at the same time as payday lenders, and some insurers had confused the two,” said NACFB’s chief executive Paul Goodman.
“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 new agreements between NACFB, broker Towergate Insurance, Lloyd’s of London insurer Beazley and Funding Circle, the restrictions on P2P products were finally dropped.
“P2P 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,” said Goodman.
“In the UK, direct lending through Funding Circle has enabled nearly 60,000 investors to support 22,000 British small businesses with more than £2bn in finance,” said Neil Mullane, sales performance and commercial manager at Funding Circle UK.
“We worked closely with Towergate Insurance to demonstrate that we are able to provide businesses and finance brokers with greater choice beyond the traditional lenders; with a faster, flexible and personalised service.”
“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.”