It says the unprecedented conditions in the credit markets means that few lenders have funds to lend, and many brokers have exited the market.
Which has had a severe knock-on effect on the finances of FISA.
The board has considered a range of options to enable FISA to continue but decided that the best course is a managed transfer of activity to the industry trade associations – the Finance and Leasing Association representing lenders and the Association of Finance Brokers representing brokers.
The AFB will offer all FISA brokers, who are not already AFB members, free membership for six months, and will enhance the advice it provides about Consumer Credit Act regulation and compliance. While the FLA’s Lending Code already sets good practice standards for lenders.
The new FISA board has been the one place where senior lenders and brokers could come together formally to discuss market practices and their impact on regulation.
In future senior FLA and AFB representatives will meet regularly – probably quarterly – so that this dialogue, which everyone considers essential, can continue.
A number of broker members of the FISA Board will also join the AFB Board. Among the items for early discussion by the new group will be what needs to replace the FISA Borrowers’ Guide.
FISA operates a panel of surveyors approved to carry out valuations. Over the last few months considerable effort has gone into tightening the criteria which surveyors must meet to be accepted on to the panel. Discussions are being held with the FLA on taking over both the database and Foundation training course.
Phil Nunnerley, chairman of FISA, says: “Since it was set up in 1989 FISA has delivered considerable value, both in providing advice and guidance to brokers and lenders, and in helping consumers.
“But the regulatory landscape is changing and the industry is shrinking. The arrangements we have come to with the FLA and the AFB mean that the industry will continue to have the advice and support it needs into the future.”
Robert Sinclair, director of the Association of Finance Brokers, says: “The demise of FISA is a reflection of how badly the economic downturn has impacted on our sector. However, brokers can be reassured that AFB remains in place to protect their interests.
“We are offering membership to all FISA brokers that are not at present members of AFB. We have also been working closely with FISA and the Finance and Leasing Association (FLA) to agree how to best represent the industry with Government and the regulator.
“We will continue to lobby for a better, more respected and recognised industry. AFB members are fortunate to come under the respected banner of its sister organisation the Association of Independent Financial Advisers. This link provides essential support and influence for AFB and its members.”