Find out all about the latest news, happenings and developments in Bexhill UK.

Latest News

Court of Appeal ruling is ‘nail in the coffin' for undisclosed broker commissions
29 Nov, 2021

The conjoined Wood v Commercial First Business and Ors and Business Mortgage Finance 4 v Pengelly Court of Appeal ruling, which was handed down in March 2021, is the “nail in the coffin" for undisclosed broker commissions, according to Ravi Takhar, chief executive of premium finance provider Bexhill UK. Click here to read more

New Premium Finance Rules - What does it mean for the industry?
06 Jun, 2021

Brokers are going ’to have to change the way they do business’ around premium finance following the FCA's pricing reforms, says insurance premium finance chief executive. Read more here

25 Sep, 2018

Our New LEND XP system is live and we have completed most of our migration. Check out some of the features here!

Credit Searches
07 Sep, 2018

Broker’s not to make reply

“Charge for the guns” he said,

Though not a soldier knew,

Someone had blundered,

There’s not to reason why,

There’s not to make reply,

There’s just to do or die…

This is the second verse from Charge of the Light Brigade by Tennyson. I quote it because I love it, but also because this is exactly the position that all brokers find themselves subject to from the leading providers of premium finance.

The leaders completely monopolise the market, if they ask brokers to do something, brokers cannot reason why, brokers cannot reply, they must just do or the business relationship with the providers dies.

A great example of this is the interpretation of the FCA Affordability Rules adopted by the leading providers. Brokers are not invited to debate the Rules as they have been told that in future their customers must be subject to certain defined checks. One of these checks which is understandably causing consternation is the completion of “hard” credit checks. A hard credit check, means that a broker’s customer will have an entry made on this credit file and each payment made by the client will be entered on the credit file. If the client misses a payment, this will be recorded on the credit file and will affect the client’s ability to get future credit.

There is no requirement to conduct hard credit checks in the FCA Affordability Rules – but brokers are not to make reply. The market needs more lenders so that brokers can make reply. We have been helping brokers to have a voice and determine their premium finance destiny for over 16 years and believe there is a more relevant and appropriate interpretation of the FCA Affordability Rules to the insurance premium finance market. 

Treating Customers Fairly - Insurance Times
12 Jun, 2018

We are all governed and must abide by the High-Level Standards set out as Commandments by the FCA. In those 6 High Level Standards, the first one is Principles. Principles is then sub-divided in to 11 sub-sets. I’d like to discuss the 2 Principles, which in my mind stand out as the acid test of the Culture of a business organisation in the 21st century of financial services.

The 2 Principles are Integrity and putting Customer Interests first – i.e. Treating Customers Fairly.

The global financial crisis highlighted the need for a firms Culture to be putting the Customer firmly at the centre of its business. A sound business culture will ensure that everything a firm does is for the benefit of its Customer and there is no conflict between a firm’s business practices and the best interests of the Customer.

If the firm’s Culture is to put the Customer firmly at the centre of its business, as all firm’s are now hopefully keen to ensure are there any aspects of the business which do not align with this Culture.

Historically where firms have failed to put the Customer first the FCA has stepped in. Whether this is selling of payment protection policies, or the charging of disgustingly high interest rates, the FCA has firmly put a stop to unfair practices. In each case the financial services firms promoting such products tried to justify them on commercial grounds. There is no art to this however. It’s simple, what is unfair is quite simply unfair.

In my view many but not all insurance brokers are putting profit first and not the Customer in their sale of premium finance to the Customer. Like all such historic unfair practices the FCA will soon stop this with clarification of existing rules and if necessary fines.

Competition in Premium Finance – Really?
21 Apr, 2018

It’s interesting to note the definition of unfair market domination under competition guidelines. Where a company controls over 40% of a market there is assumed to be unfair control of a market, which in turn is assumed to mean the market is not properly competitive.

In the UK 2 companies control over 90% of the premium finance market. The companies have systematically taken measures to prevent new players from entering the market and have done an excellent job of keeping the market to themselves for over 20 years.

How have they managed to do this?

For a start premium finance is provided to brokers on the basis that they cannot use any one else for a period of time – this can be up to 3 years.

Commissions are often paid in advance. Before a broker has even written and introduced a premium finance deal to the lender. This in effect prevents a new finance provider from entering the market as the broker becomes completely reliant on the advance commission check as working capital for its business.

Say a new knight enters the market and provides a competitive offer to a broker. After years of charging a higher rate, the mythical dragon premium finance provider in its benevolence reduces its rate to avoid a new competitor entering the market.

Add to this integration into broker software systems and multi-million spend on IT systems you can see why no new knightly competition can exist in the market and all new competition is effectively kept out.

Well you may think this is not so bad for the broker. A broker is still able to play the 2 mythical dragons off against each other and get the best deal so who cares – happy days as a broker grinds the 2 beasts down and gets a brilliant deal for himself.

Let’s pose a theoretical problem. What if the gang of 2 dragons decide to act in together to increase rates to all brokers. The lack of competition in the market will mean that brokers will not have any options. Further, what if the private equity owners of one of the beasts decides that they can’t be bothered with the market any more. Oh dear – only 1 lender left and that can’t be good for the broker – can it?

Finally what if the regulator passes a rule, which says that the 2 dragons have to limit the commissions brokers can earn from their premium finance business ( by the way, this is coming from the regulator) – with the limited competition what options will the broker have? None!

We need some knights to fight the good fight, but the dragons keep trying to burn them alive!

Investigation of Commissions to Brokers from Premium Finance – Told you so!
24 Mar, 2018

Call me boring, but I have stated on a number of occasions that the commissions that some brokers earn from their premium finance business is unsustainable.

I have stated that it’s simply unfair for a broker’s customer to pay a hugely inflated APR, simply because his broker has decided to add a completely arbitrary flat rate commission on top of the lender’s flat rate.

To use a bit of Latin for the cultured insurance broker market that will be reading this – this produces a reductio ad absurdum, as the broker’s flat rate commission becomes many multiples (yes that’s 100s of % more) than the lender’s flat rate.

Not only is it unfair to the broker’s customer its also unfair to the lender. The vast majority of the income from the lending activity is actually paid out in flat rate commission to the broker. The lender takes the capital risk, liquidity risk, regulatory risk and operational risk for the lending, but the broker makes all the return. It makes no commercial sense.

So broker’s flat rate commissions for insurance premium finance are not fair to the broker’s customer and not fair to the lender providing the insurance premium finance. I have stated on a number of occasions that this state of affairs is not sustainable in a fair, open and transparent market.

Enter stage left the FCA.

The FCA don’t seem to be fans of broker’s charging excessive commissions. A recent FCA paper dated March 2018 states the following and will make interesting reading for all those involved in the financing of insurance premiums:

Some types of commission arrangements can provide incentives for brokers to arrange finance at higher interest rates for their customers. We are assessing whether the risks are adequately controlled by lenders, to minimise the potential for harm to consumers……. We are also testing whether commission structures have led to higher finance costs for consumers, because of the incentives they create for brokers

The FCA’s remit appears clear and they will complete their review by September 2018.

I think it is quite simple isn’t it. All premium finance commissions are calculated on the basis of an additional flat rate on to the lender’s flat rate. There is a clear and undisputable incentive for brokers to arrange finance at higher interest rates. Further again, to keep this as simple as possible, the addition of commissions to the flat rate of a customer has led to higher finance costs for consumers. Therefore this is unfair to consumers. QED.

Take away the incentive and the finance rate to customers will be reduced and this will be fairer to consumers. Insurance premium finance is an add on product that earns commission for a broker in addition to the commission the broker earns from providing insurance. At the moment the balance is too far weighted in favour of the broker. The FCA have started work on redressing the balance. The main income received from premium finance should be to the lender, who is taking all the risk of the lending. If a broker wants to earn income from premium finance they should be a lender, not a broker – it’s as simple as that. 

The On-line insurance journey – disrupted due to new FCA premium finance requirements?
16 Dec, 2017

In olden times, a broker asked her customer if she would like finance to spread the cost of her insurance premium, posted or faxed the details of the customer to a friendly premium finance provider, who confirmed the finance and then after as long as possible and a few reminders settled the insurance broker. Some premium finance providers made an art of this, collecting as many instalments as possible from the customer before eventually deigning to settle the broker.

Oh, how things have changed and become slicker. In this modern high-tech age, a customer goes on-line, gets her insurance and at the same time gets her finance. The broker doesn’t need to intervene. When the broker’s customer ticks the finance option, the broker is settled with funds from the finance provider and the finance provider simply collects from the customer. How simple is that?

However, all good things must come to an end. New regulatory requirements now mean that the lender must be a lot more “Responsible” and both the broker and the lender must treat their customers fairly.

So how can a lender demonstrate that he has been “Responsible”. Is checking the customer’s credit history satisfactory? According to the regulator you would get nil points for this answer. Just so you get this, if you have a customer that has historically always paid you on time and also paid all its other credit obligations on time, if you simply lend to that person, that is not being “Responsible”. So how do you get “Responsible”? Again according to the Regulator you must ask the customer its income and expenses and you must ask the customer whether the finance they are taking is “affordable”. Not a big issue you may say – but in the context of the insurance industry it is a very big set of questions. Insurance companies and insurance brokers have never historically asked their customers for a breakdown of their income and expenses. In fact, when I asked a number of brokers about this, they clearly stated that they would feel very uncomfortable asking their customers this question.

Let’s get back to our wonderful on-line journey. Can you see how it is in danger of breaking down, with this income and expenses question? Let’s say the wonderful teenagers in your tech department say no problem, we’ll just add a couple of questions to the on-line system that will ask the income and expenses of the customer. Adding 2 more boxes is child’s play for the kids in the tech department. Might take a little longer for some of those more “established” insurance broker system providers though. So we have our solution? 2 more boxes job done. Alas no. As how do you know that the information provided by the customer is correct? There is no way of verifying income other than wage slips or bank statements – but you can’t include viewing bank statements as part of an on-line journey for the sale of an insurance product!

So the beautiful on-line journey, which insurance companies, brokers and finance providers have spent many millions of pounds on appears to be broken.

We have only just considered the “Responsible” lending part. The treating customers fairly part will also need to be changed in the on-line journey. Currently, customers simply tick a box stating that they want finance. They are quoted a rate, which most of them ignore or care very little about. The problem is that the rate they are paying on an on-line journey may be different on another on-line journey even though the ultimate lender is the same entity. I’ve said it before and I’ll say it again. For a broker and a lender to treat a customer fairly they must charge the same rate, regardless of the broker through whom the customer finances the policy.

Premium Finance Commission – Can the dream last?
14 Sep, 2017

As a great business leader in the Insurance broking industry once said to me – “There are only 3 ways of making money out of insurance broking and I always aim to maximise them all – commission income (squeeze those greedy insurance companies), fee income (charge as much as is reasonable) and premium finance commission (f*** those insurance premium finance providers)”.

Nice guy that business leader and as he then he told me about his next round the world holiday on a private jet, it was clear he was doing something right!

As I am the CEO of a premium finance lender I hope you don’t mind if I talk to you a little about premium finance commission.

Lenders love premium finance. It’s finance for an essential product, so borrowers pay and even when they don’t pay, the ability to cancel policies and claw-back premiums or better still ask the introducing broker to pay up makes it the safest form of lending out there.

So premium finance is a brilliant product for lenders, who are therefore willing to pay brokers a lot to get the product onto their balance sheets.

Premium finance is also brilliant for insurance brokers, as it helps them sell their insurance products and at the same time earn a healthy premium finance commission income on top of their insurance income. As the premium finance income is incremental and they effectively don’t have to do any extra work for it, the income from premium finance income can slide nicely down to the bottom line. This now means that many insurance brokers make a substantial amount of their income from premium finance. Indeed, some insurance brokers make all their income from premium finance commission, often running their core insurance broking business at a loss.

Finally let’s get to the most important party, the customer. Premium finance is brilliant for the customer, it enables her to spread her payments over a number of payments, therefore enabling her to drive her car or protect her home and valuables.

What a great dream product premium finance is – everyone’s a winner.

Well maybe not everybody. I can see a clear winner and 2 other parties – can you?

Let’s start with the poor premium finance provider. Is he really a winner? Due to intense competition in the market, premium finance providers have had to thin their margins to the absolute minimum in order to win broker’s business. This has on a number of occasions led to price wars for a key broker’s business. The poor lenders, bless them, have also had to do wonderful things for brokers, like provide attractive marketing allowances. So definitely 1-0 to the broker against the lender.

At least the customer is a winner! Or is she. The customer has been offered point of sale finance by a broker, which wants her to buy his insurance. It’s quick and convenient, no form filling, no difficult questions. The monthly payment seems ok, yes, the APR appears a bit high, but what is that anyway? Does the customer know that to earn premium finance commission the broker commonly increases the lenders rate by 3 or 4 times and in extreme cases nearly 10 times!

Oh dear, maybe the customer isn’t a winner. So, it’s 2-0 to the broker.

I don’t want to be a party pooper, but you have to admit this dream can’t last for ever.

14 Mar, 2017

Winner of the 2017 Commercial Insurance Awards

Click here to download 

06 Jan, 2017

Bexhill UK are proud to announce that we have been nominated for another 2 awards in 2017.

Intermediary of the Year finalist, Commercial Insurance Awards 2017 

Initiative of the Year finalist, Commercial Insurance Awards 2017

09 Nov, 2016

We are proud to present our sponsorship of the Insurance Times top 50 Insurers for 2016 for the second year running

26 Oct, 2016

Going to the Expo on the 10th of November then enter our Golden Ticket competition

27 Sep, 2016

Nominated for Service Provider of the year 2016 by the Insurance Times.

09 Sep, 2016

We will be exhibiting at the Expo in Coventry at the Ricoh arena on the 10th of November 2016. Come and say hello on stand 31

20 May, 2016

We are moving offices on the 20/05/2016 to 721 Capability Green. There may be some disruption, we apologise for any inconvenience this may cause.

10 May, 2016

Bexhill UK are exhibiting at BIBA in Manchester and will be on stand B76.

03 Mar, 2016

Our CEO’s expert view Read our CEO’s expert view in the Insurance Times

Premium Finance Self-Funding
24 Feb, 2016

A question which is on the lips of a number of insurance brokers is whether they should self-fund their premium finance rather than rely on 3rd party providers of funding such as Premium Credit and Close.

We have been advising insurance brokers on premium finance self-funding since 2002 and through our support over 100 UK insurance brokers now own and operate their own premium finance business. Some of the largest insurance brokers in the UK have been self-funding their clients for many years.

In today’s market everybody seems to be lending, through Peer 2 Peer lenders, grandmother’s in Bolton are lending to secretaries in London. The simple question is why aren’t more insurance brokers lending to their clients?

We have proven data that establishes that any insurance broker that sets up its own in-house premium finance company can become self-funding within 1-5 years. Self-funding means having all the cash required to finance all your clients without relying on any 3rd party funder.

There are a number of reasons why brokers are considering setting up an on-house premium finance facility.

Firstly, the FCA are becoming increasingly focused and concerned at commissions brokers are making from the add-on premium finance product. Some brokers only make a modest commission, but we understand that even commissions of 1% are being questioned by the FCA. As you all are aware a number of brokers earn a far greater commission, which in many cases dwarf the net rate provided by 3rd party funders. These commissions are not sustainable. By contrast a lending rate charged by a finance company is not a commission and therefore as long as below the High Cost Credit Rate (currently 100% APR), is deemed to be more of an appropriate reward for the risk taken.

Secondly, brokers are more concerned with maintaining control of the customer journey. Using a 3rd party finance provider is a break in the journey outside the broker’s control and many brokers want to retain this control and ensure high quality service to their clients through controlling the financing of their clients and controlling the charges to their clients for mid-term adjustments, failed direct debits and arrears letters.

Thirdly, brokers wish to maximise the return on any cash equity they have accumulated.

Brokers need to weigh up the benefits of simply broking their finance business to a 3rd party lender and actually lending to their own clients. There are a number of benefits to each model, but as the Banks continue to offer little or not return for bank deposits, brokers like everybody else in the market are looking for better returns on their hard earned cash.

Premium Finance Self-Funding – Living the Dream
13 Feb, 2016

We have been advising insurance brokers on the premium finance self-funding dream since 2002 and through our support over 100 UK insurance brokers are living the dream. In today’s market everybody seems to be lending, through Peer 2 Peer lenders, grandmother’s in Bolton are lending to secretaries in London. Our simple question is why aren’t more insurance brokers lending to the best borrowers in the market, their clients?

We guarantee that any insurance broker that sets up its own in-house premium finance company can become self-funding within 1-5 years. Self-funding means having all the cash required to finance all your clients without relying on any 3rd party such as Premium Credit or Close Brothers.

We walk each broker through the service that 3rd party lenders provide to them. Our simple question is whether a broker believes that it is getting good value and service from its 3rd party lending relationships. We then explain how simple it is to self-fund their clients’ insurance premiums.

Self-funding effectively means having a cash-pile sitting in your premium finance company. Some of our brokers, who aren’t particularly huge, are currently sitting on millions of pounds of cash, which they have built up over a number of years of lending to their clients.

As well as building up a cash pile, which is always nice, there are a number of other great benefits to a broker from setting up an in-house premium finance business. Firstly, the FCA are becoming increasingly focused and concerned at commissions brokers are making from the add-on premium finance product. Some brokers only make a modest commission, but we understand that even commissions of 1% are being questioned. As you all are aware a number of brokers earn a far greater commission, which in many cases dwarf the net rate provided by 3rd party funders. These commissions are not sustainable. By contrast a lending rate charged by a finance company is not a commission and therefore as long as below the High Cost Credit Rate (currently 100% APR), is deemed to be more of an appropriate reward for the risk taken. Secondly, brokers are more concerned with maintaining control of the customer journey. Using a 3rd party finance provider is a break in the journey outside the broker’s control and many brokers want to retain this control and ensure high quality service to their clients through controlling the financing of their clients.

Bexhill UK has helped over a 100 insurance brokers to become self-funding. Whilst you are earning 0% by lending your money to the Banks, isn’t it a good time to consider earning a much better return by lending your money to someone you can trust, your client!

 

03 Nov, 2015

We are delighted to publish our final results for the year for Orchard Funding Group Plc. Read about it in Regulatory News

20 Oct, 2015

Read our CEO's thoughts on an Insurance Broker becoming a lender in today’s market in the InsuranceAge. Read about it in Insurance Age

NEWS ARCHIVE

British Insurance Awards 2016 – London
27 May, 2016

Bexhill UK has been shortlisted for ‘Service Provider of the Year’ at the British Insurance Awards 2016. Wish us luck!

15 Jul, 2015

Bexhill UK obtains full FCA authorisation. Regulatory News

Insurance Times Awards 2013 – London.
03 Dec, 2013

Bexhill UK was shortlisted as a finalist for the Insurance Times Awards 2013 in the category ‘Business Partner of the Year’. It was a great evening and the organisers made sure that everything went smoothly. The competition in our category was tough and, unfortunately , we did not manage to come back to the office with a prize. Maybe next year. To sum up, it was a great evening and we were extremely proud to be finalists for such a prestigious award. We felt that being shortlisted amongst some of the biggest names in the Insurance Industry was already a huge accomplishment!

BIBA 2013 – London
16 May, 2013

Our time at this year’s BIBA exhibition was once again a success. Thank you to everyone who visited us at our stand - we hope you are all looking after your little white owls!! It was lovely to see quite a few of our existing clients and also great to speak with many potential clients!