Following the recent review by the FSA into brokers’ premium finance deals, Premium Credit has announced support for this investigation and outcome. Commenting on the announcement Andrew Doman, Chief Executive Officer at Premium Credit said:
“The FSA has said it will not be taking any further action into brokers’ premium finance deals but has cautioned for intermediaries to be transparent. Premium Credit fully supports the FSA and believe there should always be full transparency when it comes to any financial product, including premium finance.
“Premium finance plays a very important role in helping small and medium sized businesses throughout the UK by providing financing for their growth. We offer businesses method of financing a bundle of insurance policies from multiple underwriters. Premium Credit alone lends approximately £2 billion per year to UK businesses, out of our total advances – which last year totalled £3.3 billion.
“Premium financing is vital in allowing brokers and their clients immediate access to funds at APRs that may be lower than rates from other sources. At Premium Credit we offer a very rapid loan approval, often at the point of sale. We support growth in the UK economy and want to play our part in the creation of new jobs. We have funds immediately available and are prepared to support brokers and insurers who wish to source premium finance from a third party.
“The FSA also reinforced the need for brokers to act in their client’s best interest in particular by recommending insurer installment options if in the interests of the insured to do so. This is already recognised by Premium Credit and has been made clear in our trading agreements with brokers. We always make it clear to brokers that as they are the agent of the borrower, it is their duty to act in their client’s best interests.
“Another emphasis by the FSA was the need for brokers to communicate clearly the cost of insurance separate to premium financing. This again reinforces the current policy at Premium Credit of requiring brokers to provide financing terms to clients in a timely and clear manner.
“Treating customers fairly (TCF) is central to regulation and ensuring an efficient and effective market and helping consumers achieve a fair deal. Disclosure and transparency will continue to be the key in achieving TCF. As the market leader in the premium finance business we are committed to ensuring our industry has the appropriate processes and controls in place and transparency is a number one priority for all.
“We have a long standing relationship with BIBA, and will continue to support the industry in ensuring that we work with them on key industry and regulatory issues in the premium finance market, and sharing best practice and guidance to protect and support their insurance broker members and customers. Premium finance is a vital source of funding for UK business”
