Over 130 agreements reviewed, resulting in widespread contract amendments
The National Association of Commercial Finance Brokers (NACFB) has completed a comprehensive review of 131 broker agreements over the past year, leading to changes in 94% of contracts to ensure fairer terms for brokers.
The review process, introduced in 2023, was led by a contract specialist to tackle concerns about unclear and one-sided contractual terms in broker-lender agreements. The initiative aimed to address imbalances in agreements that placed disproportionate risk on brokers.
The review found that nearly all lender agreements required amendments to improve fairness, with the most frequently revised clauses relating to data protection, audit processes, complaint resolution, and intellectual property rights – all areas crucial for reducing disputes and regulatory risks.
Common issues identified included ambiguous dispute resolution mechanisms and excessive liability clauses. The NACFB worked with 98 existing Patron lenders and 33 new market entrants to refine terms, ensuring greater clarity and risk-sharing.
“The NACFB observed how brokers were increasingly bearing risks beyond their control, stifling their ability to serve SMEs effectively,” said Sarah Cunningham (pictured left), head of compliance at NACFB. “We dedicated specific resource to ensure agreements align with regulatory standards and mutual accountability. Our efforts have not been about diminishing broker responsibilities – more about creating greater fairness and clarity so all parties can thrive.”
According to Cunningham, the changes focused on streamlining procedural requirements, such as standardising notice periods and refining monitoring obligations.
“The NACFB’s model prioritises partnership over confrontation,” she said. “Lenders receive tailored recommendations to amend terms, with some even adopting the trade body’s own template to pre-empt inequities.”
NACFB chief executive Jim Higginbotham (pictured right) also emphasised the initiative’s broader impact on the commercial finance sector.
“Fair agreements are the foundation of a healthy commercial finance ecosystem,” he said. “When brokers and lenders share risks transparently, SMEs gain faster access to capital, fuelling economic growth. We’re really proud of this work, it underscores our role as a unifying force – ensuring no party is unfairly disadvantaged.”
Higginbotham also noted that upcoming legal developments could prompt further adjustments to agreements.
“With the Supreme Court ruling on broker commission disclosure and informed consent expected in the first half of the year, commercial lenders will likely look to make further addendums to their introducer agreement,” he said. “The team will be on hand to review any changes through the appropriate lens to ensure fair and transparent expectations for brokers.”
Established in 1992, the NACFB represents more than 1,300 firms and 2,750 individual commercial finance brokers across the UK. In 2023, its members facilitated over £38 billion in SME funding.
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