Stephen Sklaroff examines some of the industry’s achievements as well as challenges still ahead
We help around 250,000 businesses to invest in new equipment each year. We finance the majority of equipment investment by businesses that need to borrow.
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Only one in every 4,000 customers uses our widely-publicised complaint-handling service. Awareness of asset finance among businesses is higher than for many years.
New business involving deals of up to £20m grew by 4% in May to almost £1.9bn in that month. Every Government scheme introduced in the past two years to support business lending has included asset finance, in marked contrast to the situation for many years before that.
There is, of course, no room for complacency, but these facts – and facts they are – are a little hard to reconcile with the picture sometimes painted when the industry debates its future.
It’s perhaps natural – even healthy – to focus on what isn’t working so well rather than on the industry’s successes, but we should celebrate those successes too.
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By GlobalDataWe are, after all, funding nearly a third of all UK investment in business equipment and the mood reflected in the FLA’s regular surveys of opinion in the industry is one of cautious optimism.
It’s useful to compare where we stand with other countries in Europe.
The Leaseurope Annual Survey, recently published, shows the UK is the largest national market in Europe for new leasing and hire purchase business, and for outstandings.
These figures include the consumer car finance market in the UK (where FLA members are currently financing three in every four private purchases of new cars).
Across the UK economy as a whole, investment has grown (a little) over the past two years, while it has been flat or in decline in other major European economies.
The Leaseurope survey also shows the UK has one of the highest leasing penetration rates among the larger markets in Europe. (Further detail on these figures is available, by the way, for all members of the FLA and for the other 32 national leasing bodies that took part in the Leaseurope survey.)
This is a good place to be. But it would certainly be wrong to suggest we have no problems or challenges.
We continue our efforts to mitigate the risks associated with intermediated business. We are working hard with the relevant public authorities, including schools and hospitals, to make the most of the available leasing options, and we still have further to go.
The FLA’s Business Finance Code Group continues to address issues which may affect the wider reputation of the industry.
And the threat from inappropriate new regulation is ever-present.
The International Accounting Standards Board’s latest proposals are an improvement on its original suggestions but would still, if unamended, create unreasonable new burdens for lessees. We are continuing to argue for further changes.
The proposed new UK regulatory regime for consumer credit could have the unintended consequence of making it more difficult for our brokers and equipment suppliers to introduce some of the smallest businesses, which are often in greatest need of finance.
We are explaining the problem to the Government and seeking pragmatic solutions from the new regulator.
Meanwhile, there will be much to do as the European Banking Authority decides critical details of the new European capital requirements over the coming years.
We are working with Leaseurope on a research project to show the low default and loss risks associated with asset finance.
We could extend the list. There will always be challenges, and we need to rise to them. But let’s also take a moment to celebrate the UK success shown in the Leaseurope Annual Survey.
Stephen Sklaroff is director general of the Finance & Leasing Association
