Simon Goldie, Director of Business Finance and Advocacy
With the continued war in Ukraine, energy prices and inflation still high, it might seem foolhardy to say that 2023 will be a year for opportunity for the asset finance sector. The reality is that FLA members ended 2022 on a sound footing with reasonable growth, and as we enter the new year, energy prices are beginning to reduce, inflation appears to be slowing down and the prediction of interest rates continually ratcheting up looks to be off the mark.
Regardless of the economic headwinds and constant geopolitical uncertainty, our members and their customers continue to do business – financing equipment and services for the private and public sector, and in particular small and medium businesses. That vital role adds value to the economy, helping businesses to create wealth and growth. The challenges of the SME transition to net zero, the introduction of the new Consumer Duty and ensuring the relationship between funders and intermediaries works well for customers are all opportunities for member firms and the asset finance sector more generally.
FLA asset finance members will continue to fund a wide range of green assets. Not only that but many are working with their customers to navigate what is green and what assets will work best for their businesses and the demands of investors, who increasingly are looking for firms to set out a path to net zero. There are of course obstacles to this such as a lack of a secondary market for some assets which impacts on the residual value of assets. That is why we have been working with the British Business Bank, HM Treasury and the Department for Business, Energy & Industrial Strategy (BEIS) on risk sharing. We are also talking to the Government and Opposition about the barriers to financing green and how they can be overcome.
The introduction of the Consumer Duty in July this year is an opportunity for members to review and refresh their interactions with customers and intermediaries. All FLA members adhere to the Business Finance Code, and the Duty echoes much of what we expect from members: ensuring the customer understands the agreement they are entering into and get the best deal at the time. This also means that we need to make sure we understand how intermediaries, and asset finance brokers in particular, see the world to help make the customer journey as smooth as possible. To that end we have upped our engagement with asset finance brokers.
In 2020, FLA members demonstrated how robust their staff and systems were. They switched workforces from office to home, and in many cases the functions of staff. 2023 and beyond will show how they can deal with external events that they have no control over. There will be challenges but all in all, the asset finance sector will step up and seize the opportunities that are there.
Published 19 Jan 2023