Good morning, and welcome to the first of a new series of summaries written by the Johnson Reed staff focused on providing a summary and key news on the leasing finance industry in the UK. We’ll be publishing these on a (currently) ad-hoc basis when we have substantially interesting news to provide to our readers about the state of leasing, new innovations, regulations, and any finance news which affects the majority of our customers.
2016 is shaping up to be an excellent year for SMEs taking advantage of leasing finance, with encouraging reports of growth from the FLA below. However the report from Growth Business (bottom) provides troubling reading about the exposure of alternative forms of finance to SMEs.
Leaseurope launches SME Roundtable
Source: LeasingWorld
Leasuerope, a leading organisation in the leasing and vehicle finance world has continued to push for greater understanding of the use of leasing by SMEs in Europe by running a new series of SME Roundtable events. First run in December 2015 in Milan by ASSILEA, there are expected to be more events across Europe in 2016.
The purpose of the events is to improve understanding of leasing as an avenue for SMEs to gain finance for their business, and to find and remove obstacles that might be preventing growth in the industry, such as issues facing business owners in acquiring leasing.
By initiating these national roundtables, Leaseurope again contributes to the debate on SME access to finance and provides various SME stakeholders and policy makers with valuable evidence showing that leasing is a crucial form of finance for SMEs.
Leon Dhaene, Director General of Leaseurope
Asset finance up 9% in February
Source: Finance & Leasing Association (FLA)
Asset finance seems to be going from strength-to-strength, with the Finance & Leasing Association (FLA) reporting that for the first 2 months of 2016 the sector grew on the previous year.
January showed a growth in 3% on the previous year, while February had a 9% growth on 2015. Consumer finance also took a big boost in February, with a 22% growth on last year.
These figures add to the impressive 28 consecutive monthly growth streak that the industry is enjoying.
The asset finance market saw stronger new business growth in February following a relatively quiet start to 2016. The improvement was broad-based with most of the main asset sectors reporting higher levels of new business. These figures suggest that business confidence remains relatively robust despite uncertainty about the global economic outlook and the EU membership referendum.
Geraldine Kilkelly, Head of Research and Chief Economist at the FLA
Could nuclear fuel be the next leasing sector?
Source: World Nuclear News (WNN)
Could leasing be moving into a strange, new direction? At the World Nuclear Fuel Cycle conference in Abu Dhabi, a revolutionary (at least in the finance sense) model was proposed: leasing nuclear fuel from uranium suppliers to power plants. This would place both sourcing and recycling of used nuclear fuel in the hands of the supplier.
FCA release 2016/17 business plan
Source: FCA (PDF)
The FCA has recently published their 2016/17 business plan, which comes with 7 priorities for its focus over the next year:
- Pensions – Fair treatment for consumers, stronger competition and a market that meets consumer needs
- Financial crime and Anti-Money Laundering – Better, proportionate and more ef cient AML controls and consumers who are better able to avoid scams
- Wholesale financial markets – Strong controls which protect market integrity and ensure clean, ef cient and effective markets
- Advice – Affordable, professional advice to meet consumers’ changing and complex needs
- Innovation and technology – Resilient systems and new sources of competition
- Firms’ culture and governance – Strong culture and governance which helps competition and consumers alike
- Treatment of existing customers – Effective competition, a fair deal and greater transparency for long-standing customers
The FCA has been given the responsibility of regulating a sector which plays a
critical role in the lives of everyone in the UK and without which the modern
economy could not function. It is our job to make markets work well – delivering
for individuals, for businesses large and small and for our economy as a whole.
Tracey McDermott, Chief Executive Officer, FCA
Three in four SMEs too risk-averse to seek finance
Source: Praseeda Nair, Growth Business
Are small business owners too “risk-averse” to try finance? That’s true, according to a study conducted by Wesleyan Bank, which showed that only 4% of SME owners said they would consider “equity finance, asset based lending, and asset finance”. The report highlights a troubling trend of owners who prefer to “Google it” rather than turn to their bank or private lender for advice.
Around three quarters of SME owners felt uncertain about the funding options available to them, which is a matter of concern for everyone as it indicates a “non-borrowing culture” exists amongst SMEs that might be stunting the UK economy’s growth.
