NACFB members enjoy improved insurance cover for peer-to-peer loans

As members of the NACFB, brokers must have professional indemnity insurance which covers them against claims of mis-selling from clients.

However, insurance companies had previously restricted the amount of business commercial finance brokers could place with peer-to-peer lenders for their cover to remain valid.

A deal struck between the NACFB, Towergate Insurance and Funding Circle, means this is no longer the case.

Explaining the issue, Paul Goodman, chairman of the NACFB, said: “Peer-to-peer lenders came onto the market at the same time as payday lenders, and some insurers had confused the two. There was a perception that peer-to-peer lenders placed onerous terms and conditions on how the loans should be repaid and that this would make commercial finance brokers vulnerable to charges of mis-selling.

“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.”

Discussing the new deal, he added: “Following a milestone meeting with the NACFB, broker Towergate Insurance which arranges the NACFB’s exclusive members’ cover, Lloyd’s of London insurer Beazley and peer-to-peer lender Funding Circle, NACFB’s cover now contains no restrictions.

“This makes NACFB’s exclusive cover the only policy in the market specifically designed for commercial finance brokers which covers an unlimited amount of brokered loans with peer-to-peer lenders.”

Neil Mullane, sales performance and commercial manager at Funding Circle, said: “Peer-to-peer lending through Funding Circle in the UK has so far seen 58,755 investors lend over £2bn to British businesses. 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.”