Each year the UK’s trade association, the Finance and Leasing Association, (FLA) throws a lavish dinner for its members. This year it was held at the Grosvenor House Hotel on London’s Park Lane and on 24 February, 1,500 guests, including the great and the good from many of the association’s members met up to socialise in style and discuss the year’s business.
FLA chairman Nigel Clibbens welcomed attendees and during his speech said:"As a sector, I think we sometimes underestimate our contribution to the economy. We shouldn’t. We’re playing a vital role in the economic development of the UK.
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"2014 saw over 130 FLA members write almost £100bn of new business. That’s a record level and a very significant 25% chunk of the total £407bn of new business lending and consumer credit in the UK last year. This is a massive organisation."
Wealth creation
Clibbens continued: "FLA members lent £25bn to businesses, to finance the assets they needed to grow and create wealth. This represents 27% of all UK investment in machinery and equipment and purchased software last year.
"Leasing and hire purchase came to the rescue of thousands of firms investing to grow and it was particularly important with, and important to, SMEs. Our credit application success rates were the highest of all the major finance options – that’s some achievement.
"FLA members also provided £74bn of consumer credit to support family purchases, like household appliances, furniture and cars, £25bn of which was provided from motor dealerships last year to finance more than three-quarters of all private new car sales in the UK. That’s almost 900,000 new vehicles. As you can see, FLA members are playing a major role in the economy."
Clibbens was keen to address the links between the FLA and the British Business Bank (BBB), which "recognises asset finance as a market solution to a market failure in small business lending.
"The FLA helped the BBB develop the new asset finance funding vehicle, which was launched last November. We walked with them on Round 6 of the Regional Growth Fund, and we hope that they will extend the Enterprise Finance Guarantee scheme to include asset finance.
"The other element that a thriving economy will need is certainty. The FCA consumer regulation credit regime introduced at breakneck speed last year has created some new uncertainties in our markets.
"In April 2014, an extra 50,000 firms were added to the 27,000 the FCA already supervised, and the scale of the regulatory change was huge: a new rule book, principal’s state regulation, application of approved person’s scheme for credit, the list goes on. And that’s a challenge.
"Much of our sector’s strength lies in diversity. We are small, medium and large lenders competing for customers. We don’t want a situation where the regulatory burden for small asset finance dealers or brokers or smaller consumer credit intermediaries forces them out of the market, because the unintended consequences for the customer will be a loss of competition, choice, and local knowledge.
"This is in a time where major politicians say they want to break the stranglehold of incumbent players. If we are not careful, the complete opposite will happen. The new regime is still bedding in, so what we need from the FCA is a proportionate approach, and some answers to practical questions about how to interpret their rules for the realities of our diverse market.
"For example, appropriate affordability checks for someone borrowing £500 and someone borrowing £5,000 may be different.
"The regime also needs to take account of the breadth of the credit market, from someone seeking an unsecured loan to purchase furniture, to the farm that needs vital equipment to run efficiently.
Linchpin
"Over the last year, the FLA has been the linchpin between the government, the regulator and the industry, building strong relationships with policy-makers, negotiating with officials to drum up workable proposals, hosting conferences, running workshops and training courses to get members ready for the new regime.
"And this set-up has succeeded. Because the vast majority of us are prepared for authorisation. I congratulate you all for achieving this in such a short space of time.
"The message from us to those of you in government and those of you who are campaigning for a place in the next one, is that we’re doing our bit, so please work with us to create a thriving industry.
"I reiterate – our market is vast, our market is complex, our market is growing, and the ground is still moving beneath our feet.
"You might have seen yesterday’s papers on the news from the regulators involving vulnerability. Only today have we seen another consultation paper from the FCA making a whole series of detailed changes to the rule book, with the promise of more to come on affordability, and broker-introducer remuneration.
"Between numerous regulatory consultation papers and the general election, spring 2015 will be an interesting time for us all."
