The delay of the proposed new lease accounting standard
deprives the leasing industry of certainty and clarity at a time
when precise information and harmonisation are essential for market
players to plan ahead.
Keeping up with the sheer volume of
regulation is never an easy task, and regulators need to realise
that consistency is vital in order for providers to understand and
apply new rules.
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It is better to have good regulation
that commands the respect of the leasing and asset finance sector
than one, which is hastily assembled to meet an arbitrary
timeline.
Irrespective of whether the delay is
good or bad news for the leasing market, it could be argued the
explanation by Financial Accounting Standards Board (FASB) chairman
Leslie Seidman that the June delivery date was always “a target,
not a deadline” portrays the FASB, and the International Accounting
Standards Board, as ‘dithering’.
The fear that a new culture of
regulation may be stifling economic growth is widespread in the
financial services sector.
With this in mind, the interim report
released by the Independent Commission on Banking requires
assessment, as it could significantly impact the leasing
industry.
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By GlobalDataIn short, the report could lead to
banks delivering leasing via corporate banking services in their
branches as part of an efficiency drive.
There are also concerns that charges
for asset finance could increase.
Like the proposed lease accounting
standard, the only way to deal with the possibilities thrown up by
the report will be to monitor events as they change because, in
this environment, information is power.
Few would argue that today’s rapidly
changing business world requires new rules.
However, drafting regulation should
not be an academic exercise which sparks as many questions as it
answers.
It is not too much to ask for new
rules to be well-considered, intelligent and delivered on time.
This would ensure everyone in the
market has a clear understanding of the regulation and how to
enforce it effectively.
Ronan McCaughey
ronan.mccaughey@vrlfinancialnews.com
