Things are improving, but not
necessarily in ways which all lessors approve.
Leasing companies have a phobia for
new regulations, but their worst fears are about to come true. The
leasing sector is about to be hit by a fresh wave of rules,
regulations, laws and guidance notes, the scale of which has never
been seen before.
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A quick jog through the main changes
that are about to hit the UK and German leasing sectors will help
focus peoples’ minds.
First off, in the UK, the Finance
& Leasing Association, in response to the flood of Shire
Leasing-brokered deals that went bad after they were linked to
corruption and fraud on the part of suppliers involved, is drawing
up new guidelines on lessor-broker agreements.
They are expected to recommend that
more numerous and stiffer warranties are in place so lessors are
better placed to sue brokers if, for example, they refer deals that
are mispriced or are linked to undisclosed side agreements.
Second, Article 21 of the Consumer
Credit Directive (CCD), which is due to come into force next year,
will effectively transform, in the eyes of the law, leasing brokers
into so-called credit intermediaries (see comment on page 22). This
will make them legally responsible for the advice they give
customers, meaning they will become more like independent financial
advisers. Also, as a result of Article 21, lessors will no longer
be exempt from liability arising from
accepting corrupt deals from brokers.
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By GlobalDataThird, lessors might need to be
extra vigilant about avoiding any connections with bribery.
A UK Bribery Bill, which prohibits
companies and individuals paying and receiving bribes, was included
in last month’s Queen’s Speech, and leasing companies are subject
to the possible new rules.
David Lawler, a partner at Forensic
Risk Alliance, listed last month the particularly high-risk
bribery-related issues for the leasing sector.
They included: sales of high-value
equipment to governments; all operations that take place through
agents; local transactions in countries high on the Transparency
International Corruption Perceptions Index; deals involving freight
forwarding, visa agents, and tax authorities; and taking shortcuts
when obtaining permits.
Fourth, according to Michael Jürgen
Werner, a Norton Rose partner specialising in competition,
regulatory and EC practice, the European Commission, having
introduced new banking regulation, is believed to be considering
doing something similar for commercial vehicle and automotive
captive companies (see Brussels Watch on page 11).
Fifth, a 14-day cooling-off period
for new point-of-sale finance agreements is due to come into force
as part of the CCD.
Sixth, German lessors are now
subject to new rules for notification and reporting requirements,
and also for risk management. They are also now subject to
anti-money-laundering rules.
Seventh, Germany’s Bundesanstalt für
Finanzdienstleistungsaufsicht (BaFin), the supervisory authority
for leasing companies, has recently further refined and extended
its minimum requirements for risk management for banks and
financial services institutions.
These introduce tougher and more
wide-ranging supervisory requirements with regard to stress
testing, liquidity risk and risk concentration (see comment piece
on page 5 of the attached German supplement).
It will be down to the lessors
themselves whether or not these rules will sink lessors – and lease
brokers – or help them swim in the tide of recession.
Either way, these changes will bring
lessors a short distance away from self regulation, and a little
closer to full blown regulation.
Brendan Malkin
