Advice for unregulated finance brokers facing financial penalties

Finance brokers without regulation are facing more legal challenges about deals they arranged years ago. This legal action involves claims of wrongly selling various financial products, from personal options like bridging loans and mortgages to business borrowings such as loans and asset-based lending.

Some people think this situation could become the next Payment Protection Insurance (PPI) mis-selling scandal, where banks had to pay out billions of pounds to customers who joined those schemes.


What is the current situation?

Unregulated finance brokers are now facing legal action when irregularities are discovered in the initial paperwork. 

The challenge lies in the fact that these irregularities were widespread in the industry, impacting a large number of brokers. A common irregularity involves obtaining a signature over a Skype call, rather than using more traditional methods.


How does this impact finance brokers and lenders?

If discrepancies are identified, it usually means the finance company, not the broker, is responsible for compensating the customer as required. 

However, many contracts of this nature between the lender and the broker often include a clause stating that if irregularities are found, the finance company can reclaim their losses from the brokers.

Unregulated brokers may face claims amounting to millions of pounds collectively. Individually, such demands for compensation could push a broker to the brink if they are too significant for the company to handle.


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What should be your responsibilities if you are affected?

If you’re an unregulated finance broker concerned about an impending fine or penalty, the advice remains the same as for any company facing financial challenges: contact a business rescue expert as soon as possible.

A licensed insolvency practitioner can guide you through your current situation and clarify the potential impact of any impending fines on your company’s finances.

We will assess your company’s ability to pay any owed compensation and then help you explore available options. 

This might include formal restructuring of liabilities via a Company Voluntary Arrangement (CVA), negotiations with creditors, or facilitating an orderly wind-down through a Creditors’ Voluntary Liquidation (CVL) if the company is no longer viable.

Contact our team today to schedule a free, no-obligation initial consultation with a licensed insolvency practitioner. With over 100 offices, expert help and advice are always within reach.

Senior Partner at Vanguard Insolvency Practitioners | Website | + posts

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.