The recent transfer of credit regulation from the Office of Fair Trading to the Financial Conduct Authority (FCA) took place with unprecedented speed. Little attention was given to the application of the new regime to the considerable proportion of the small business lending market which it covers. Our members, who provide leasing and hire purchase to many small businesses, have worked hard to meet the challenges of the new regime. We have stressed to the Government and the FCA the need to apply the regime proportionately, and to recognise the fundamental differences between lending to individual consumers and to businesses. The risk otherwise will be a contraction in responsible business lending.
New lease accounting rules
The International Accounting Standards Board (IASB) published the new Lease accounting standard, IFRS 16 in January 2016. Our lobbying to date has emphasised lessees’ need for clarity and simplicity, and we continue to work with a number of UK and European bodies representing investors, accountants and regulators to encourage the IASB to recognise the potential impact of the standard on the asset finance market.
Leaseurope have prepared a factsheet on IFRS 16 that you view via the link below
Asset finance and the Government’s support schemes for SMEs
The focus of our successful campaign to have asset finance included in the Government’s initiatives to stimulate business investment is now turning to smaller non-bank lenders who still face higher funding costs than banks. This group of smaller, more specialist lenders can help reach small firms in particular sectors. We are also working closely with the British Business Bank on a number of initiatives, including the development of extending the Enterprise Finance Guarantee Scheme to include asset finance.
Making it easier to do business
The FLA has developed comprehensive online material to help members manage the risks which can arise when working with intermediaries. The checklist covers issues ranging from finding the right introducer, through to credit-checking customers and ensuring the agreement is understood by all.
Leasing Guidance for Schools
The FLA in partnership with the Department for Education and NASBM has produced revised guidance for schools that are considering leasing equipment. The new Leasing Guidance for Schools can be accessed here. Schools may also find the consultation response we drafted in 2011 useful. The link is below.