Sadly factoring brokers are not regulated in any way so anyone can set up as a broker whether they know anything about the industry or not and dispense so called advice that may benefit their client or could just as likely lead them into financial ruin.
The internet has made life easier for factoring brokers as all one needs is an enticing looking website using plenty of buzz words like “experienced” “specialist” and “independent” the site gives companies the impression that the broker is someone worth dealing with whereas the truth is that the so called broker is merely a lead generator collecting leads that are passed onto someone else for a commission.
A look at any factoring broker website will show that all of them claim to be independent and impartial but with many brokers they are anything but. We have already mentioned the high profile broker that claimed to be independent and impartial despite actually being owned by one of the major factoring companies. Then there are the brokers owned by insolvency practitioners whose raison d’etre is to gain lucrative insolvency work from the factoring companies by offering them the new leads that are the lifeblood of the industry.
Then there is the high profile broker who undertakes audit work on clients of one of the major factoring subsidiaries of a High Street bank earning substantial fees in the process and who supplies the same factoring company with leads in a mutual back scratching exercise.
As the above shows, there is sufficient cause for regulation of the factoring broking industry to be introduced but this seems to be highly unlikely which is why The Independent Factoring Brokers Association was set up to act as a stopgap with only truly independent and impartial factoring brokers being eligible for membership and not surprisingly there aren’t many members.
The association is sponsored by Factoring Solutions which is a long established broker that has absolutely no affinity to any factoring company and doesn’t derive any income from any other activity apart from it’s core business as an independent, specialist factoring broker
Ian Johnston is one of the most experienced specialist factoring people in the UK having been involved in the industry since it’s early days in this country