Getting hassled to recommend finance companies

[Peterpetrole]

We manufacture quite niche expensive commercial equipment (£100,000+) and at a recent trade show we had several approaches from finance companies wanting us to pass their details on to potential customers.

Which on the face of it is potentially helpful with some customers who want to use finance and wouldn't be able to afford our products otherwise.

However it seems fairly obvious to us (small business) that we are clearly not authorised financial advisors and we legally should not be expressing any preferences to our potential customers for finance suppliers.

Assuming that's right, why are finance companies approaching us at all? Aren't they breaking some sort of FSA type guidelines? Anything we should do to cover ourselves further legally?

[StevieBee]

I think there's a subtle but important difference between suggesting a few options to customers and 'recommending' one.

Credit card companies pay other companies to promote their card to customers; adding a leaflet in consignments or mailings without any need for the company to have FSA accreditation - they are simply a marketing channel for them which I suspect is what these companies are looking to you to be.

If you started to offer finance via third party firms, then I would imagine some form of accretion would then apply.

[Peterpetrole]

StevieBee said:

I think there's a subtle but important difference between suggesting a few options to customers and 'recommending' one.

Credit card companies pay other companies to promote their card to customers; adding a leaflet in consignments or mailings without any need for the company to have FSA accreditation - they are simply a marketing channel for them which I suspect is what these companies are looking to you to be.

If you started to offer finance via third party firms, then I would imagine some form of accretion would then apply.

Interesting point thanks will ponder it

[(steven)]

Regulations are different between consumer lending and B2B lending. A lot less regulation if your truly are dealing with businesses.

While having lending facilities can be helpful to shift product, if you end up shifting a lot of product, it would be more common for the lending company to pay you a % of the value of the loan, as you are essentially providing the loan company with a free marketing channel otherwise.

[egor110]

Why not refuse and nip it in the bud right at the start ?

[M1AGM]

As its commercial I’d do due diligence on the asset finance companies you have been approached by and see if they are quality lenders, and if they would suit the products you sell, it could help your business. There are a number of good asset finance companies out there, we’ve put a few clients in touch with specialist lenders in our sector (IT) to help with large project expenditures with no dramas. We simply make the introductions and leave them to it. We get paid in full by the lender once the goods were delivered/signed off.

Edited by M1AGM on Saturday 12th October 20:43

[oddball1313]

I get loads of calls from spivvy lads who sound about 20 wanting me to recommend them to customers who are buying CNC machinery from me , a lot approach it from the angle of giving me a commission for a succesful sign-up which just sounds plain wrong.

I always just recommend customers to an independent broker (who is a fully registered and regulated by the FCA) i've known for 20 years who is straight as they come, from my perspective I know Rob will get the best deal he can for my customers and no-one is going to be calling me up in years time accusing me of stitching them up.