The trade body has urged government to take action to allow the industry to support its customers with new lending mechanisms and forbearance or arrears.
Early on in the crisis Landbay co-founder and CEO John Goodall warned there would need to be some intervention for non-bank lenders.
Now the FLA, which represents the second charge sector along with wider consumer, asset and motor finance, is adding its voice, calling for government and the Bank of England to take “urgent action”.
‘Urgent help needed’
FLA director general Stephen Haddrill highlighted that those markets played 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 1,000 per cent in the week commencing 16 March, followed by a further 249 per cent increase the following week.
“This sector needs urgent government help to ensure 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,” he added.
The FLA said its members provided almost £141bn of new business in the twelve months to February 2020, two per cent higher than in the same period in 2019, £46bn was provided by non-bank lenders.