Commercial finance brokers are being warned to watch out for ‘predatory’ lenders, with MFAA president, Phil Naylor, saying some broker members have noticed ‘sharks’ circling in the sector.
“It’s mainly in the commercial finance area – not so much the mortgage area – and it’s a trend that members on our…commercial finance panel committee have noticed,” Naylor tells Australian Broker.
While the MFAA isn’t able to provide any names due to defamation laws, Naylor says the fact that there’s no regulation in the commercial area is likely attracting unscrupulous lenders.
“We’re in a [tight spot] because we lobby very strongly to the government that there shouldn’t be any regulation in commercial finance. It just shows there are some small lenders on the fringe, in the commercial area, who are acting in a predatory way.”
He’s also quick to note that brokers are not believed to be working alongside the shady lenders, but rather are being duped right alongside their clients.
“Basically, the modus operandi is to charge large up-front fees and then not deliver and unfortunately, the client gets burned - but the broker who’s caught in the middle gets burned as well,” he says.
“The reason it’s come to our attention is brokers are complaining about [the lenders] because they’re concerned that they’re ripping off customers, but also giving the broker a bad reputation because…the consumer feels that somehow the broker’s let them down.”
The MFAA plans to publish an article in the October edition of their magazine, outlining how commercial finance brokers can identify dodgy lenders and avoid them.