It has been a tumultuous year for the asset finance industry, with Brexit deadlines being extended and businesses worried to invest.
The ‘B’ word as businesses have called it, has sent waves of fear and uncertainty through the economy, contributing to poor market performances until the election results.
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Those results gave businesses some clarity on what the next year could look like. On reflection, asset finance leaders are optimistic about the future.
Ian Smith, chief executive of 1pm said: “2019 has been a year of uncertainty both from a political and economic standpoint which is casting a shadow over British businesses looking to grow. As Brexit continues to draw out, we observe caution around investment and confidence levels falling.”
“Yet, the classic British ‘keep calm and carry on attitude’ prevails. Small businesses are proving resilient, continuing to seek financial support from alternative, specialist finance providers to support their plans. For funders and brokers, this year has been one focused around responding to the changing needs of British businesses, whilst encouraging confidence and growth,” he added.
Smith said the financial landscape has adapted to changes, with markets more competitive than usual.
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By GlobalData“The financial services landscape has continued to adapt to this, with a market as competitive as ever. We have observed an increasing need for a hybrid approach to supporting SMEs and offering a seamless service, with business owners wanting fully personalised offerings as well as integration between personal and digital channels,” Smith said.
Wes Harfield from Investec Asset Finance said he believes the industry has been resilient in 2020 with uncertainty and political upheaval.
“Overall, the asset finance industry has remained resilient in 2020. Although competition has certainly been tough over the past year, and consequently several businesses have exited the sector, the market in general has been relatively flat and stable compared to 2018,” he said.
Harfield said the biggest question from importers and manufactures is in regards to tariffs post Brexit.
“When looking back at this year we can’t ignore Brexit. Our chief economist, Phil Shaw, spoke at a conference recently and was inundated with enquiries from importers and manufacturers around potential tariffs associated with bringing equipment into the UK post Brexit. This will be a huge factor as we enter 2020,” he said.
Head of asset finance at the Financial Leasing Association (FLA), Simon Goldie highlights that business has grown and new business higher than in previous years.
“Asset finance new business grew by 5% in September, compared with the same month in 2018, and in Q3 2019, new business was 5% higher than in the same quarter last year – that’s a very strong performance,” he said.
“As well as increasing numbers of businesses choosing leasing and hire purchase for their investment needs, the profile of asset finance has also grown among our stakeholders,” he added.
In response to the election results, the FLA called on the new government to make legislative reforms to “fit the digital age.”
Stephen Haddrill, director general of the FLA said: “At the FLA, we want to see some legislative reform, principally to the Consumer Credit Act (CCA). Is there scope in the government agenda for this? We believe so, but we will need to work with other stakeholders, and consumer representatives in particular.”
“We also need to show that what we’re asking for is already aligned to important key issues – for instance, financing green vehicles, which contributes to net zero emissions; strengthening investment, which would help to drive productivity especially in SMEs, and modernising analogue legislation so that it is fit for a digital age,” he added.
He also said the country following months of turbulence has a mandate to govern for a full term with the numbers to get business through the House of Commons.
Haddrill also highlighted positive market reaction to the results as “a no-deal Brexit risk remains but is less likely than it was.”
All in all the asset finance and leasing industry has had its ups and downs this year but has come out the other side and looks to a positive 2020.
