Setting Up As A Lease Broker

[JBash]

Good afternoon

Just looking for some advise/guidance on setting up my Lease Broker business.

A little bit of background. Myself and a couple of friends/colleagues have been in the motor trade for many years now and are ready to make the jump to going it alone. We have a small pot of money set aside to start up, but at this point I'm a bit stuck!

At present, we have a limited business, access to a broker network, application ongoing with the BVRLA, as well as ancillary systems and support.

Our current stumbling block is the FCA. I've read through the handbook and have a passable understanding of the terminology and what is expected from us (from being SAF accredited through the motor trade). I'm just struggling to find out exactly what we require before submitting an application.

Our business will focus on brokering BCH with occasional PCH, with an opportunity to broker 'outright' purchases direct with certain manufacturers. My guess is that we would need full permission because of the consumer aspect of the business.

The problem is, is that its just a guess! If anyone has had experience setting up a broker business with the FCA and can share some guidance, that would be fantastic. I would also be happy to take any recommendations for a company who deal with compliance advice who I could solicit.

The three main questions I'm looking for an answer for is...

1. What type of permissions would we require?
2. What would the cost be for the application and subsequent annual fees?
3. What would the anticipated timescale be from application submission to being able to trade.

Any help is appreciated, hopefully I've given enough relevant details.
Many thanks,
Joe

 

[Mark T Jones]

The FCA themselves should be able to answer most of these questions.

As a broker operating exclusively B2B I have only limited permission (which I might relinquish) but in your case you will definitely need full permission.

Beyond that, look forward to lots of bureaucracy

 

[JBash]

Thanks for the swift reply Mark. I have reached out to the FCA and awaiting a response.

We may look at going B2B to make it simpler.

 

[JBash]

Good morning Mark

Just wanted to ask for a bit of guidance from yourself if possible? (or anyone else that may want to comment).

Having gone back and forth with the FCA over the last few weeks, I'm still struggling to get a definitive answer. The FCA will not advice, but will only refer to the handbook!

I've spent hours pouring over the relevant sections and I can't see why we need authorisation or permissions. We have decided to not deal with consumer credit, as from experience, its not worth the headache!

We are happy dealing exclusively with B2B (Its what we do now) and understand that we wont be offering a consumer credit service as the agreements *should* be unregulated due to it being a business contract hire / outright purchase.

You mentioned that you have Limited Permissions which you may relinquish. 2 questions.

What are the benefits for you to have limited permissions?
Why would you relinquish the Limited Permission?

Thanks for your time,
Joe

 

[Mark T Jones]

Good morning Mark

Just wanted to ask for a bit of guidance from yourself if possible? (or anyone else that may want to comment).

Having gone back and forth with the FCA over the last few weeks, I'm still struggling to get a definitive answer. The FCA will not advice, but will only refer to the handbook!

I've spent hours pouring over the relevant sections and I can't see why we need authorisation or permissions. We have decided to not deal with consumer credit, as from experience, its not worth the headache!

We are happy dealing exclusively with B2B (Its what we do now) and understand that we wont be offering a consumer credit service as the agreements *should* be unregulated due to it being a business contract hire / outright purchase.

You mentioned that you have Limited Permissions which you may relinquish. 2 questions.

What are the benefits for you to have limited permissions?
Why would you relinquish the Limited Permission?

Thanks for your time,
Joe

I relinquished my authorisation this week - it gave rise to interesting discussions

My situation is unambiguous in that I operate B2B and aim for a minimum deal size of £50k

The FCA - in a nutshell - don't have a clue.

On one hand they want brokers 'in the fold' for consumer duty, on the other hand they are opposed to 'flag waving' (using the FCA as a badge of authenticity when you don't actually need it)

In your case you will need to talk with lenders, as they will have their own views and criteria.

Here is my LinkedIn post on the subject https://www.linkedin.com/posts/fund...As?utm_source=share&utm_medium=member_android

 

[JBash]

Interesting. I fully agree that the FCA don't have a clue, and mentioned to a colleague the other day that I feel that they hide behind their handbook and are unable to offer any solid advice, however, they're quick enough to hit you with a stick when/if you slip up!

Ultimately, I think the best route is to look at going for Limited Permission as this will allow us to deal with the odd regulated agreement (Sole Trader, individual, Small Business). You mentioned that in your time being regulated, you've never underwritten a regulated deal which gives me a bit of confidence, but I also understand that we are in different markets.

From what I understand, because our main business activity isn't consumer credit brokering, but unregulated brokering, this should be fine. Furthermore, one of your commentators on your Linkedin post mentioned the fact that some funders require authorisation which I too have found. Having spoken to Novuna, to gain access to their offering we need to meet several criteria, one of which is being authorised by the FCA.

I really do appreciate the guidance Mark, and wish you all the best.

Kind regards,
Joe