"My message to lenders is to get on board with these codes of conduct and become advocates for them. "
The clearest sign of this can be seen in the Treasury Committee's SME Finance report that was released in October.
The example of GRG is clearly referenced, with the authors stating that lack of regulation not only allowed or even encouraged misconduct but it also meant that disciplinary action was far more difficult after the fact, and often requires court action to resolve disputes.
In the report's Conclusions and Recommendations it states there is no justification for leaving commercial lending outside of the regulatory perimeter and it clearly passes the ball to the FCA to design and implement a 'proportionate' regulatory regime.
Of course the key word is 'proportionate' because heavy-handed regulation could bring the law of unintended consequences into play - which could be bad for business and the alternative lending sector.
However, energy shouldn't be wasted on fighting potential legislation - the focus should helping to shape it before it arrives.
I largely agree with the Treasury Report findings, particularly the strong theme of putting customers first and the need for trust to be rebuilt.
At Just Cashflow we have always operated as if we were a regulated entity because it is the right thing to do and to my mind it has always been a question of 'when' and not 'if' regulation will arrive.
I passionately believe that as lenders our prime focus has to be on making decisions in the best interests of our customers and key to this, of course is affordability and ensuring customers fully understand the ramifications of the agreements they are entering into.
So how do we go about shaping and influencing future legislation ?
With my chairman of the Association of Alternative Business Finance hat on I am proud that the association was formed to promote best standards of industry practice under the core operating principles of; Security, Transparency, Responsibility and Fairness.
This was designed to build on the excellent lead taken by David Pickering and the Lending Standards Board with its comprehensive Lending Practice for Business Customers.
So my message to lenders is to get on board with these codes of conduct and become advocates for them. If regulators see they are supporting sound and positive outcomes – there’s no need to reinvent the wheel.
Let's ensure the regulators and politicians know the excellent initiatives that are already taking place and in this way help shape and influence the legislation so that it doesn't lead to the unexpected consequences too much red tape can bring.
The alternative lending industry has a key role to play in providing SMEs with much needed finance and ensuring decisions are always made in the best interests of customers. Given this, a light-touch but impactful set of regulations that are good for the customer may be just what the industry needs to reinforce confidence. Why not be part of this?
