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Turn And Face The (Financial) Strain

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Recent changes to financial regulations could have a major impact on broadcast equipment dealers. Medialease's Paul Robson has some friendly advice.

As a man who regularly wears bright pink trousers, it is fair to say I am not renowned for taking life too seriously, but what I have to say here is very important so please listen up – especially if you work for a broadcast equipment dealer.

The people that look after credit and finance in this country have changed their rules and it affects you.

The Financial Services and Markets Act (FSMA) has decreed that any firm or individual who carries out a regulated activity in the UK must be authorised by the FCA (Financial Conduct Authority), unless they are exempt.

Now, if you're wondering what this has to do with kit suppliers, I will explain.

If you sell equipment to a sole trader or partnership (with less than four partners) and you introduce them to a financial company to help assist them with the purchase of your equipment, you (the dealer) need to be regulated by the FCA. Yes, you read that correctly. From now on, the very act of making an introduction is considered to be the act of credit brokering, even if you do not receive a commission for the introduction. In short, you can't make any unauthorised introductions.

We all know that introducing a potential buyer to an asset finance company can be the difference between getting a sale and, well, not getting a sale. As such, it happens on a regular basis.

The reason they are clamping down is to avoid more 'mis-selling' sagas, many of which have been well documented.

One approach is to think: 'Rules, pah! They won't clamp down on that.' Maybe they will, maybe they won't. But the punishment for making unregulated introductions is pretty severe.

I don't want to unduly scare you, but if the FCA finds you guilty of what they term unauthorised credit brokering, it is considered breaking the law and you could be punished accordingly.

Gulp. I told you it was serious.

There are some caveats of course. Firstly, as I have already stated, this only applies to introductions where the purchaser is a sole trader (such as a freelance camera person) or in a partnership of less than four people (e.g. grip and focus puller). So, you can continue to refer limited companies to your heart's content.

Equally, if credit is offered as 0% interest for 12 months or less then it doesn't apply. And solicitors, accountants or actuaries that run regulated activities alongside their main business are among the people that are exempt.

If none of those exceptions apply to you as a dealer, however, and you regularly deal with sole traders and small partnerships – and you want to introduce a buyer to an asset financier in order to make a sale (staying within the law) – then you must be one of the following: a) Regulated by The FCA or b) an appointed representative of a business that is regulated by The FCA.

So, there is good news and there is bad news.

The bad news is that, from personal, first-hand experience, I can tell you that getting authorisation from The FCA is a tortuous process. It can take months of disclosures, audit trails and lengthy procedure writing. Then, once you're approved, a monitoring process begins. It is not recommended for the faint hearted.

Now for the good news.

Some asset finance companies, like Medialease (not-so-coincidentally), have been through that tortuous process, are now regulated by the FCA and can potentially appoint you as a representative.

If you're thinking, 'hang on a cotton-picking minute, I don't want to be tied to a broker', do not fret.

All you have to do is fill in a form and play by some simple rules of engagement and we will essentially 'lend' you our regulatory permissions. You won't be aligned to us exclusively anyway, even if we arrange finance for the deal.

We will be more than happy to help you as long as you act in a manner that follows FCA guidelines. There are some stringent stipulations but nothing that most companies wouldn't do as a matter of course. We then assume the responsibility of authorisation on your behalf.

For reputable and honourable dealers, there is certainly a conversation to be had.

If you've read this far, thank you. I'll sum up: the rules on introducing a finance company have changed; you need to be aware of what is going on; my advice is to look into it; and if you want to become an appointed representative, we are regulated and can help.

Anyway, enough of this serious stuff, where are those pink trousers?

Paul Robson is the Managing Director of the asset finance and leasing company, Medialease.

This article can also be read at BFV online here, page 48.


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