Other sections in this guide:
*Please note though that this is not intended to be an exhaustive list of the issues to be considered nor is it meant to constitute any form of advice to you. As far as we are able, we exclude all liability for any reliance you or any other party may place on the information and you should seek any specific advice that you feel is necessary to help you make an informed decision.*
So now you know what Block Funding is and how it works, it’s good to know what you might need to consider before taking the plunge.
1. Considering the agreement types you wish to offer
As a broker you may already know that certain permissions are needed to write regulated business. If you’re thinking of becoming a funder, you need to make the decision on whether you want to enter into Regulated Agreements. If that is one of your aspirations, then you’ll need to comply with the FCA’s principles and obtain ‘Funder’ permissions from the FCA. In addition to rules set out by the FCA any regulated agreements that you enter into must also comply with the Consumer Credit Act. Whilst you are starting out, you may not wish to accept regulated agreements as they can be more complicated to administer.
2. Compliance with the Data protection Act
3. Update your VAT registration
If you decide you’d like to fund your own book, you’ll need to make sure you have the appropriate VAT registration in place as you’ll have suppliers invoicing you for good and you’ll be invoicing out rentals. If you offer a lease as a product that will have an impact on the volume of VAT invoices you issue.
4. Finding a system
As a funder you’ll need to a central system to capture agreement details. The cost and sophistication of the system will not only need to be balanced against the volume and type of business that you write but of course will also be dependent on the product types and other information you may need to capture.
As a minimum requirement, the system needs to record all the basic agreement details to allow you to collect rentals or let you know when someone has defaulted and administer any in life changes that need to happen - from the difficult task of chasing late payments to other administrative tasks such as changing an address to quoting early settlements.
Your system requirements could be relatively simple if you decide to only deal with non-regulated agreements or one product. Your system requirements will likely start to get complex if you need to deal with regulated agreements, multiple products and if you need features such as an accounting tool built in.