The Finance and Leasing Association (FLA) wants Government and the Bank of England (BoE) to take urgent action to support the non-bank lending market during the ongoing COVID-19 coronavirus lockdown.
Almost a month after its head of motor finance, Adrian Dally, described finance as “the petrol in the engine of the economy” and urged lenders to do all they could to support motorists, the FLA said that its members were suffering huge cashflow drain from forbearance.
New figures published today (April 14) by the FLA showed that consumer finance new business grew in February 2020 by 6% compared with the same month in 2019.
Credit card and personal loan new business together grew by 9% year-on-year while retail store and online credit new business increased by 2%.
Stephen Haddrill, director general at the FLA, said: “The asset, consumer and motor finance markets play a significant role in supporting businesses and households across all sectors of the economy.
“We have welcomed the financial support schemes that the Government and Bank of England have put in place so far, but urgent action is now needed to ensure that non-bank lenders are able to continue to serve customers, both through new lending and forbearance.
“Non-bank lenders rely heavily on the capital markets and bank funding, which are essentially closed to them.
“Support needs to be provided to non-bank lenders to help them deal with the huge cashflow drain from forbearance, with Covid-related requests growing by more than 1000% in the week commencing March 16, followed by a further 249% increase the following week.
“This sector needs urgent Government help to ensure that it is still in a position to lend to individuals and businesses when the current market disruption ends, because without their input, the UK’s economic recovery will be much slower.”
In his interview with AM last month, Dally said that every effort should be made to keep motorists “in their cars” as the COVID-19 coronavirus lockdown inhibited some consumers’ ability to make repayments.
Government has urged mortgage providers to offer three-month repayment 'holidays' available to homeowners in light of the financial strain placed on many households by the coronavirus outbreak.
Dally said: “How we support our customers now is really critical.
“We are having conversations with all the relevant authorities to determine exactly what that support looks like. It’s clear that many customers will require support to help bridge them through this period.
“In a nutshell, in the motor finance sector, what it means is keeping customers in their cars is what’s needed.”
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