Packagers and brokers could merge when they realise how much work is required to gain full FCA authorisation, according to Chaseblue Loans.

The second charge, bridging and commercial loans packager was granted full permissions earlier this month, but Ben Gillespie, Managing Director, admitted that the process was hard work.

He told Loan Talk: “At Chaseblue we made the necessary changes earlier in the year and it did affect us for a few months, but now we are over that, we see March not having much of an impact in our business levels as our process is already aligned.”

Ben said many firms may have to increase staff levels to deal with next year’s introduction of the Mortgage Credit Directive, or even merge with other brokers.

He added: “I also think packagers will have to alter [their] business process and employ larger compliance teams to manage. This will obviously affect profitability and business, [and those] that don’t forecast and plan ahead will feel the pain the most.

“I think the lender side of the market is getting a little crowded, but I think a few packagers will merge or close when they see how much work being fully authorised entails.

“I do foresee the larger packagers growing whilst smaller ones may struggle unless they keep their costs down.

But the hard work doesn’t end once a broker or packager has been authorised.

Finance compliance provider Simplybiz helps firms through the process and said this status needs to be continually maintained.

David Golder, Managing Director of SimplyBiz Consumer Credit Centre, told Loan Talk: “ To achieve authorisation, firms must meet the FCA’s threshold conditions and provide evidence that their business processes are robust, fit for purpose and that they can demonstrate their approach to TCF (treating customers fairly) throughout. 

“This initial application will need to be supported on an ongoing basis, clearly demonstrating that they meet the FCA’s 11 core principles.  In addition, firms will be required to submit a GABRIEL report [the FCA’s online regulatory reporting system] to the FCA on an agreed regular basis.”

SimplyBiz provides support in maintaining authorisation through its business compliance hub which contains guides and all the relevant paperwork needed.

It also provides implementation visits, where a member of the team will visit a firm to check if it is implementing the correct procedures and processes.

David expects the market to fluctuate as firms decide how best to deal with the changes.

She added: “As with any regulatory change, there is the inevitable loss of firms due to those taking a change in circumstances as their cue to retire, or to amend their business practices to avoid business affected by new regulation, so, for a short period, the market could contract a little.”