Fintech offers brokers better commissions after BID

by Mike Wood16 Apr 2021

Nodifi, one of the rising names in the asset finance space, are to offer a new bespoke product for brokers that can help them to navigate the new Best Interests Duty (BID) regulations that have been in force since the start of 2021.

It represents a concerted effort to bring brokers back to asset finance after many departed the space due to the new rules, which reduced commissions for brokers and dissuaded many from engaging with consumer-facing asset work.

“It allows brokers to set fixed rates for consumer asset finance,” said Alex Ventura of Nodifi of the new product. “The reason that they might want to do that is because of the new BID regulations: when they were introduced, it meant that brokers had to dial down rates to the base rates as that is in the best interest of the consumers. When they do that, they don’t earn a commission on it.”

“There has been a big grey area around consumer asset finance so to overcome that, we’ve introduce a new update to the platform that has set fixed rates so brokers don’t have to worry about it because the commission is already inclusive in what that has been dialled up to. That’s the main benefit.”

“For us, what we’ve seen is the hesitation to offer asset finance at all. For one, brokers aren’t sure. Their speciality is mortgage broking, not asset, and now they’ve had these new regulations thrown at them, they’re struggling to get their head around how it applies to mortgages and not something that they might not be too familiar with. Effectively what they’ve done is not worry about asset at all, which means that they’re missing out on revenue and the chance to help their clients.”

Nodifi are looking to leverage their expertise in the asset space to create a product that can offer added value to brokers.

“We’ve been workshopping with a lot of the brokers that use Nodifi and trying to work out how to support them,” said Ventura. “The way that we’ve seen an opportunity is with that set fixed rate. It hasn’t impacted the commercial side of broking as BID doesn’t apply, so it’s just the consumer side that has been impacted.”

“There aren’t any other aggregators that have done this as a platform. Our competitors tend to play in the mortgage space and the asset space, and a lot of the guys who have jumped ship and come to Nodifi have told us that the support that they had been getting for asset isn’t to the level that they require. It might have been for mortgages, but they don’t have that clear speciality in asset finance, so they come over to Nodifi. We purely deal in asset. It allows us to stay on the pulse and release products like the one that we just have, because everyone lives and breathes it.”