Licensing or Accreditation for sales reps
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  1. #1
    A forum user Reputation points: 2147483647 Sean Cash's Avatar
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    Aug 2012
    New York City

    Lightbulb Licensing or Accreditation for sales reps

    I've heard a few people in the industry suggest that sales reps should be subject to special licensing or accreditation in order to sell MCAs or business loans. Usually this is pushed forward as a possible solution to ending poor practices by a small segment of players. It's a very interesting topic and I think one that has a lot of challenges.

    The Electronic Transactions Association for example created their own professional licensing program known as a CPP (Certified Payment Professional). The accreditation must be renewed every 3 years for a price of $350 and with the requirement of additional testing. We are coming up on the first 3 year anniversary since the accreditation came into existence and some are calling it a failure.

    The gripe seems to be focused around the argument that merchants don't know what a CPP is so being one or not being one doesn't matter to them. Contrast that against whether or not your accountant is a CPA.

    Here's a link to the Green Sheet article that questions whether or not the CPP is DOA:

    Any thoughts?

  2. #2
    Veteran Reputation points: 159073 J.Celifarco's Avatar
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    Oct 2012
    New York

    I dont think it is a matter of merchants knowing about it as much as it is about some of the bigger banks getting together and saying they will only work with iso that have the license and practice business in a certain way

  3. #3
    Senior Member Reputation points: 50583
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    Jul 2014

    Is it horrible to say that I don't think a sole broker should be able to sell MCA's or Business Loans without being apart of a company or be registered in some way? I love how people wake up in the morning and decide to do this and not realize there are so many aspects to this business. You can hop on the phones and sell but when you get a file in, what do you do with it? That's why you see so many duplicate forum posts about who to send what where and then hear complaints or them not accepting help because points will be taken off. With all of the product lines and different UW strategies it is hardly possible for ONE broker to sell, scrub, process, chase stips, and close multiple files without a system. So my answer- YES and I will be the first to sign up and assist...

  4. #4
    Senior Member Reputation points: 4807
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    Sep 2012

    At the surface it has some merits but IMO the answer is HELL NO. Just look what happened to residential loan officers. Complete devastation of an industry. What seemed like good intentions ended up evolving into a disaster. The compensation rules ended up being a nail in the coffin after the slippery slope started.

    Anyone who thinks having State or Federal Governments imposing licensing is a good idea needs to consider where it can end up. In my mind, there is zero chance it will benefit the industry as a whole.

  5. #5
    Senior Member Reputation points: 32658 Zach's Avatar
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    Nov 2013

    It would be great, unless they were to give us restrictions on what we were allowed to charge.

  6. #6
    Senior Member Reputation points: 4807
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    Sep 2012

    Quote Originally Posted by Zach View Post
    It would be great, unless they were to give us restrictions on what we were allowed to charge.
    It's a slippery slope that nobody on the front lines wants to get involved in. A cap of fees is probable to guaranteed. Then comes compensation structure. ISO's could easily be required by law to pay minimum wage and W-2 their sales reps. Even if minimum wage isn't required, they could easily be required to pay W-2 instead of 1099 on commissions. W-2 = payroll taxes, workmans comp, and payments to State UE pool. The additional costs = lower commission % to the agents.

    Then there will be collateral damage. This industry is largely not understood by lawmakers and regulators. If they step in there will be no winners. Only losers. I cannot oppose regulating our industry enough.

    I owned and managed a medium sized mortgage brokerage for 10 years. We funded about 50% of originations on our warehouse line so we were a banker too. I lost everything to regulations. It was a complete disaster and I had to let 15 longtime employees go. Worst day of my professional life.

    I'm not saying that the mortgage industry didn't need additional oversight. That was obvious. But the way it went down was a complete disaster for many thousands of professionals. It started off slow but it kept coming and coming.

    The funny thing is we were only originating what was available to us by big banks and wall street. And we took the fall for that. Now big banks own the market again with virtually no competition from brokers and trying to be a small/medium banker in the industry is fruitless.

    Luckily States won't have much appetite for licensing in our space. It's too small. Way too small for them to have to organize oversight. States wouldn't make any money on it. They would likely lose money on it. The Federal Gov doesn't even have commercial loan originator/broker regulation in place. It's up to the States and only 10 or so have any.

    National oversight is extremely unlikely anytime soon. State oversight would be the beginning and it would start as patchwork and piecemeal if it starts at all. I'm glad I live in a State that has zero usury or comp limits on unsecured commercial loans over $15k. It's been that way for decades. CA would surely be the first to get involved. lol

  7. #7
    I personally do not want to see the state or feds do it, but would love to see the association add more of the funders, and the association offer licensing to partners that sell for them or generate referrals to them. If not licensing, some sort of training program, followed by the funders only partnering with folks who have passed. It could also become a rev source for them, and they could use it with lobbyist later to help keep us self regulated.
    Nathan Warshaw
    Warshaw Consulting

  8. #8

    Licensing or Accreditation for sales reps

    The problem with industry certifications that the entities that issue them get greedy and start charging unreasonable fees because they see it as a Cash Cow for them. I agree with Finance1,,,if we let the Feds or States enter the mix it will be a disaster. I held a Mortgage Lender, a Real Estate Sales, and appraisal licenses prior to the crash and saw first hand the mess government involvement caused. Finding a balance will be key. Sadly, issuing a license or certification isnt going to magically make anyone ethical.

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