By: Mike Coates, Managing Director of Commercial Expert Ltd.

There’s no denying that world has changed since the pandemic hit in 2019. From businesses operating digitally right through to the financial support needed not just to develop their businesses but to actually keep their businesses going. However, one of the biggest changes witnessed is the increased demand for authenticity and transparency.

Historically, we can all agree this isn’t something that some in the financial sector have considered a priority. From undisclosed commissions to unethical bridging loan completions, we’ve seen it all.

Thing is that this kind of practice – while it should have never been – won’t be tolerated in the post pandemic era and I can guarantee that we’ll start to see a rise in the number of unethical brokers and lenders closing their doors for good; through no choice of their own may I add.

Why? Lenders are becoming wise and restricting access to those who can’t prove they are acting in the best interest of the client.

Take the high street banks for example. Unless you’re a registered member of the NACFB and FCA regulated, you won’t even get past the initial contact. And even if you are, there are a whole host of policies and processes you need to evidence before they will even consider your request for finance on behalf of a client. For me, this is a major transformation from a decade ago and signals that we could just see the FCA regulation become a mandatory requirement for brokers – something we can all agree is long overdue. Until that day, all I can wish for is that all lenders have the same benchmark.

The good thing is, we’ve seen some brokers take note of the changing market and transform their offerings. One, which I won’t name, who was well known for throwing out 24% loans has become NACFB registered and completely changed their approach. In fact, they are now competing with the rest of the market and are on track to provide a sensational and competitive, safe lending solution.

But, while some brokers have cleaned up their act and are on a mission to help businesses in need, others still operating in unethical ways are using the pandemic as a perfect opportunity to crawl out of the woodwork and take advantage of businesses in their darkest hour. From pushing businesses into loans with confusing metrics, to hiding exit and commission fees, and even securing loans that do not suit the business in question; we’ve seen it all.Unfortunately, these opportunities have taken advantage of desperation and prayed on those who would be blind sighted by the promise of money in the bank quickly.

Look at bridging loans as an example. It’s not always the right path for the clientand their complexity makes it difficult for the client to understand the need for an exit plan. But the sub-par brokers I have been referencing don’t take the time to check over all of that and have been known to push clients into wrong bridging loans, seeing only the shiny commission sum dangling in front of them. This kind of practice tarnishes those of us who strive for transparency and fairness and also causes further disruption to the business later down the line.

So, how can we ensure transparency going forward?

Transparency involves options and extensive reasoning being provided to the client so that they have information to be able to make an informed decision. Standard practice in my opinion should be to never broker loans to clients without creating an exit strategy for them.

We should also work together as a sector to raise awareness of the documents clients should request from their broker before even trusting them with searching for their finance. Could we join forces to create a standard of practice, I think so!

As I always say, being FCA accredited should be mandatory, even though business loans are unregulated. It places you at a level of quality being familiar with advice protocol, systems and processes which create a fair and ethical working practice. Why wouldn’t we want this for our sector? And why wouldn’t clients want this peace of mind in an era when they crave authenticity and transparency?

Making accreditation mandatory can help to weed out the opportunist brokers who do not have the client’s interest as a priority. This means that the industry as a whole will garner the right level of transparency. I know full well that the commercial finance industry is used to the criticism of transparency and fairness. So now it’s time to push back against that once and for all.

We know full well that finance is not a one size fits all approach, so let’s work together that no one operates with that mindset.