12:50 PM, 25th November 2012, About 11 years ago
On Friday 23rd November 2012 I was honoured to be invited to attend the 20 year anniversary of the National Association of Commercial Finance Brokers “NACFB” as a VIP guest.
This article is to be the first in a series of blogs talking about the commercial finance industry, in particular my personal perceptions of commercial funding post credit crunch. I can assure you, the discussions I was a party to at the NACFB event were very different to anything you have read in the newspapers. For example, did you know that there are over 30 active property development finance lenders in the UK and yet the majority of them are struggling to hit their lending targets? That’s not what the Press tell us is it? Could it be that “self limiting beliefs” amongst lenders, brokers and perhaps more importantly, would be borrowers, are prolonging this recession?
My evening at the NACFB was far more than a trip down memory lane!
Back in 1992, just two years after establishing The Money Centre, a representative of Citibank told my business partner and I about a meeting that was taking place in the Wirral amongst a group of commercial finance brokers who had decided to get together to see if they could find a way to stamp out advance fee fraud. We knew we had to make the gruelling drive from Norwich to the Wirral to be part of this discussion. Criminal activity in any industry causes untold reputational damage to professional operators. We worked half a day, drove up there, attended the meeting in the evening and drove back to Norwich afterwards, getting home at around 4am.
Back in 1992 the UK economy was deep in recession with interest rates having hit 15%. Commercial finance broking, which is unregulated, was attracting a criminal element who were making unrealistic promises to arrange finance to bail out struggling business. They would levy arrangement fees for producing facility letters from lenders which were none existent and desperate businesses were duped into paying for these arrangements up front with no real way of knowing that they were being scammed. Such scams would be short lived now due to the internet and speed of flow of information but the Word Wide Web didn’t exist back in 1992.
Clearly the industry was getting a very tarnished reputation (the Press love a good scam story) and genuine brokers needed to act as it was clear the government were not going to. The next meeting was held in Warwick a few months later and it was at that meeting where it was agreed to form a steering committee. The formal inauguration of the NACFB came a year later in 1993.
The concept was very simple, members would sign up to a Code of Practice and Grievance Procedure and carry the NACFB logo on their letterhead. The active lenders at that time sponsored the initiative and the organisation grew from there.
If was a few years before the Code of Practice was registered by the Office of Fair Trading and rules such as members having to have Professional Indemnity Insurance were adopted but nevertheless, the concept of a representative body was welcomed in the industry and word spread fast.
My business Partner (Mike Woodfine) and I both served on the Steering Committee and I became the first Membership Director, utilising my pre-internet marketing skills to spread the word of the aims and objectives of the Association. It’s hard to believe now, looking back to 1993, that the NACFB was built on the back of 20 founder members each putting £35 into a whip around. It wasn’t the cash that made a difference, that barely covered the costs of some initial stationery and the room hire for the meeting. It was the dedication of those founder members and in particular, those on the steering committee and the board of directors who committed such a significant amount of their time for no financial reward.
The 20th Anniversary celebrations were held in London with over 600 in attendance. Cricketer Phil Tuffnel was the guest speaker and went down well with what is still to this day a predominately male dominated industry. Phil told stories of his professional cricketing career, his time in the jungle in “I’m a Celebrity Get Me Out of Here” and also on a “Question of Sport”. We were also entertained during the meal with comedy and an excellent opera trio. The band at the end of the proceedings and awards were also fantastic (from what I heard of them) but I had to feel sorry for them as the majority of the predominantly male audience soon migrated to the bar for more networking.
Despite retiring from broking in 2009 my business partner and I have retained Associate Membership of the NACFB. It was a really nice touch to be thanked for all the hard work we had put into the growth of the NACFB and to be invited as VIP guests with our evening and hotel accommodation fully paid for.
As I said at the top of this article, my trip to the NACFB 20th Anniversary celebrations was far more than a trip down memory lane. Perhaps people were sharing the truth with me because I am no longer their biggest competitor? Perhaps they just had too much to drink?
One thing is for sure, they were all telling me the same thing but I’m not sure they realised it. Self limiting beliefs seem to me to be a very big reason we are still feeling the effects of recession. Lenders which are operating are not hitting their lending targets – but why is that? There is PLENTY of money out there to be borrowed.
I will tell you why I think this phenomena is occurring in my next article.
In the meantime, please feel free to comment/debate in the section below.
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