The National Association of Commercial Finance Brokers (NACFB) has expanded insurance cover for peer-to-peer (P2P) loans taken by commercial finance brokers.
In a deal reached with Towergate Insurance and p2p lender Funding Circle, NACFB brokers are no longer restricted in the number of loans taken with p2p lenders for their indemnity insurance to remain valid.
Originally, the NACFB’s restrictions were in place to prevent brokers falling afoul of ‘onerous terms and conditions’ on p2p loan repayments, according to Paul Goodman, NACFB chairman, which he said left them at risk of being charged with mis-selling. Goodman indicated that this had left the NACFB’s brokers in a difficult position.
Goodman said: “This left commercial finance brokers having to choose between growing with this booming part of the market and the security of legal and financial backing if they were to face legal action from a client.”
As a result of the lifted restrictions, Goodman claimed the NACFB’s members were free to make an unlimited number of p2p loans and still be covered by indemnity insurance.
Neil Mullane, sales performance and commercial manager at Funding Circle, said: “We are delighted that the insurance market has recognised we provide businesses and finance brokers a greater choice beyond the traditional lenders, with flexible terms and no repayment fees.”