It’s clear that all members of the Finance & Leasing Association (FLA) have a very significant role to play in helping to secure the UK’s economic recovery. The sector has been pivotal to the upturn thus far, providing more than £22bn in funding to UK businesses in 2013, as well as over £66bn to consumers.
However, it seems certain there is still more that we can offer as a sector, and the FLA has a key role to play in accomplishing this. There are two important areas where I feel the association is well placed to support its membership – first, in continuing to raise awareness of what members have to offer, and secondly in assisting members with the introduction of new regulatory measures.
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Raising the profile of the asset finance industry
As consumer and business confidence grows, there will be an ever-important role for FLA members in funding the foundations of economic growth. This is a tremendous opportunity for the sector to increase awareness of what we can offer and the benefits we can provide.
For example, while around a third of UK business equipment investment is funded via asset finance, the structure of funding has undergone significant change since the recession and there is now a greater realisation that one size doesn’t fit all – it is better to have a portfolio of products to meet specific needs – of which asset finance is an important element.
There have been moves by the Government to promote more effectively the vast range of funding options available, which provides FLA members with an opportunity to highlight what they have to offer to businesses of all sizes. The FLA has also been successful in encouraging the Government to include asset finance in a variety of recent business funding initiatives, and I will be encouraging more progress in this area because there is obvious appetite in the market.
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By GlobalDataAs well as the 30% of fixed capital investment in the UK already funded by FLA members, the association’s research shows that 46% of survey respondents who needed new equipment and technology had considered using leasing and hire purchase to finance this – second only to using existing funds. This is encouraging, and shows that many more businesses could benefit from using asset finance in their funding mix.
Demonstrating high standards of service
Allied to this is the increasing importance of demonstrating outstanding customer service. The funding market as a whole is highly competitive so it’s essential that as FLA members we rise to the challenge and promote the highest standards of customer service along with recognised qualifications to prove our professionalism.
Given that the reputation of the financial sector as a whole is still ragged around the edges following the financial crisis, this should not be underestimated and I shall certainly be sponsoring new ways to demonstrate the high standards of service FLA members offer to UK businesses. The FLA offers a neutral and trusted organisation that transcends competition and which will be highly important in driving forward these high standards across its membership.
Mitigating the impact of regulation
There are a number of regulatory challenges facing the leasing sector in the short and medium term.
First, the Financial Conduct Authority is a relatively new body so the FLA will have a key role to play in representing members’ interests and also in communicating back to them the regulatory requirements to ensure their products in the regulated sector are compliant and appropriate for customer needs – that they are transparently priced and that any complaints are properly dealt with.
This lifting of the bar in the standards we need to adhere to is to be welcomed. However, there’s some concern about the amount of time given to respond to the new regulation, so the FLA has been keeping the regulator mindful that implementation needs to occur on a realistic timescale which doesn’t run the risk of stifling economic growth.
There is also a realisation that smaller FLA members – which have, after all, a very significant role to play, particularly in funding SME businesses – are much more vulnerable to the cost of the new regulatory requirements and the cost of compliance.
The FLA will be maintaining a strong focus on the areas I have highlighted, until the new requirements are firmly embedded.
Ongoing accounting and taxation consultations
In addition, we need to deal with the new international accountancy rules. These changes have been impending for some time and there needs to be some impetus to finalise the new rules as the delay is not only creating uncertainty but, in some cases, causing businesses to delay decisions to invest in new systems. This is not in anyone’s interest and the FLA will be continuing to ensure that members’ views are understood by the national and international regulators, and that the benefits of the proposed changes are properly assessed.
So there is a busy agenda for the FLA in representing its members. However, it’s important to note that we are a highly resilient industry – the recession clearly demonstrated this as we have come out the other side having not only survived, but in a stronger position. We have adjusted to the new post-recession era and have adapted to the changing market and needs of UK businesses. The future undoubtedly has more challenges but also presents considerable opportunity for the FLA and its members to reach those businesses that don’t currently use our products, and to convert them to the advantages that we have to offer.
Nigel Clibbens is chairman of the Finance & Leasing Association
