Regulation - Sustainability - Competition - Margins

Keynotes speakers revealed:

Martin McTague, National Chair of the Federation of Small Businesses

• The importance of SME’s to the growth ambitions of the UK government
• The increasingly strained relationship between lenders and the SME community and what impact this may have on growth in the sector
• Why the FSB issued a super-complaint to the Financial Conduct Authority (FCA) regarding the excessive use of personal guarantees to secure business lending.

Simon Evans, Chief Executive at Consumer Redress Association - a trade association for claims management companies

• Understanding the regulatory gaps which let consumers down
• How CMCs see their role – why they think there is a need to hold lenders feet to the fire; and how the regulators are impacting their work too!
• The relationship between the CMC’s, FOS and the FCA
• The relationship with the trade associations that represent the lending community
  

The people-planet-profit project is harder than we thought.

In 2021 AFC introduced the idea of regenerative capitalism to the UK AFC conference. It proposes a different approach to economic systems, one which aims not just for acceptable shareholder returns but also to maximise environmental and social capital at the same time. This dream ticket offered a way for socially aware, environmentally conscious business executives to fulfil a very human need to do good – to try to save the planet and treat people well, as well as keep their shareholders and boards happy. It also shifted the focus of ESG-awareness away from mundane but worthy activities (group work activities to clear up rubbish for example) to the heart of the economy and UK business.
In 2024 the people-planet-profit mantra is being constrained by the effectiveness of regulation, the scale of the sustainability challenge, competition from China on BEVs , and the bank-owned asset finance industry which is, once again, fighting for its share of bank capital.
The June 2024 AFC conference will tackle these issues in-depth and asks the larger question: how should the auto and equipment finance industry respond to poorly-managed market interventions?
Details of the agenda will be released in stages over the coming weeks. For now, the focus is on regulation.

Regulation
In their efforts to create better outcomes for customers, the regulators efforts have been hampered by unintended consequences. For our sector the regulator interventions are failing.
The most material recent effect of intervention in our industry has been unintended. In 2021 the FCA banned discretionary commission arrangements which they believed had the potential to cause harm to consumers. They estimated the cost of the ban would be a few £million. The consequence instead is prospectively so large that they have had to intervene to protect the orderly functioning of the industry itself.
The likely effect of the regulator’s focus on discretionary commission arrangements will be a redistribution of wealth - giving money back to consumers who have already benefitted from the services the finance industry has provided and who most lenders believe have genuinely suffered no harm. And by doing it they are threatening the very diversity of the industry that uniquely enables it to serve the hard-to-lend to minority and not just the prime customers who will always be well served by the banks. And the cost of all this will be borne by future generations of borrowers. The hardest-to-lend-to groups who can afford it least will inevitably be impacted most. They may even be at risk of becoming unfinanced.

• Asset finance regulation

Last December the Federation of Small Businesses (FSB) issued a super-complaint to the Financial Conduct Authority (FCA) highlighting the harsh lending practices of banks that demand excessive personal guarantees (PGs) for business loans. Asset Finance Connect (AFC) has invited FSB National Chair to come to the AFC Conference on 6th June 2024 at etc venues, County Hall, London to talk to its members about the FSB perspective on SME lending: how SMEs feel treated by lenders, and what lenders can do to make the SME journey better.

Rather than simply providing an echo-chamber for accepted opinion, we want to ensure that there is an informed and balanced debate and we will therefore be seeking views from all sides of the industry.

• Auto finance regulation

We will also be hosting a session run by a claims management trade association. He is Simon Evans, Chief Executive at Consumer Redress Association and he will talk about the role of CMCs, including understanding the gaps in the claims process which CMCs bridge for customers who have a complaint. He also talks about their associations efforts to build best practice in the CMC industry and how they are working with regulators to make the whole complaints process work better.

• Shoosmiths, who are AFC’s regulatory experts will be on hand to explain the implications of the increasing focus for the industry on managing conduct through regulation rather than law.

More details of our coverage of sustainability, competition and margins will follow.

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