Trade bodies implore ‘urgent action’ to help non-bank lenders support recovery

  • 07/05/2020
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Trade bodies implore ‘urgent action’ to help non-bank lenders support recovery
Financial sector trade bodies have stepped-up their calls for government support to help non-bank lenders, saying action is now required “in days, not weeks”.


In its latest statement, the Finance and Leasing Association (FLA) has emphasised that the sector will not be able to support the recovery without government or Bank of England help.

The non-bank sector has been especially hard hit during the coronavirus crisis as capital markets have almost completely closed down and lenders are denied access to the term funding support schemes, while also needing to grant payment holidays to their borrowers.

Last month a coalition of trade bodies, including the FLA, UK Finance and the Intermediary Mortgage Lenders Association (IMLA) presented a trio of schemes to Treasury and Bank of England officials.

The bodies said the schemes would be particularly targeted to support lenders offering payment holidays and other forbearance measures.

HM Treasury responded by saying it was continuing discussions with the sector and that it was “keen to understand the issues that non-bank lenders are experiencing”.

However, there has been no action yet.


‘No-one’s interests’

In a statement issued today FLA director general Stephen Haddrill, highlighted that its lenders had been hit hard by the measures taken to deal with the coronavirus crisis.

There was a 20 per cent fall in new business in March while its members have received almost 1.2 million Covid-19 related requests for forbearance, with 75 granted.

“The industry is committed to supporting their customers during these exceptional times,” he said.

“Urgent action is needed – in days, not weeks – to deliver financial support to the non-bank lending sector to ensure that we maintain a financial services sector that is diverse, innovative and competitive.”

The FLA told Specialist Lending Solutions that without help they would not be able to support the economy as lockdown measures were eased.

“Non-bank lenders are supporting customers with unprecedented levels of forbearance, but with very little new business coming in due to the ongoing lockdown, these firms won’t be in a position to lend as we emerge from the current phase,” the spokesperson said.

“That is in no one’s interests. The industry needs a prompt decision on funding so that they can plan how to resume normal business.”



The Association of Short Term Lenders (ASTL) has also added its weight to the cause of specialist lenders.

In a letter to the Treasury, it highlighted that members would be needed to provide liquidity to fund the recovery and growth in the SME community as the economy is rebuilt.

“With this in mind, we would like to discuss with you how the broad approach to the current moratorium affects short-term mortgage lenders and, as we move forward, how provision can be made to re-enforce the ability of our members to advance new loans and provide SMEs with the liquidity they will need to rebuild their businesses,” it said.

Vic Jannels, CEO of the ASTL, added: “We have endeavoured to encourage HM Treasury that it really would help if we are able to engage in a collaborative approach, which would put public health first, protect homeowners and small businesses, and also acknowledge the vital role that the short-term mortgage lending community can play in the UK’s economic recovery.

“It is important that we work together on an effective and diverse financial response to the current situation in a way that protects consumers and supports businesses.”



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