The Finance & Leasing Association (FLA) has called on the government and the Bank of England to take urgent action to support the non-bank lending market.
New figures to be released next week by the FLA will show that FLA members provided almost £141bn of new business in the twelve months to February 2020, 2% higher than in the same period in 2019. Of this total, £46bn was provided by non-bank lenders.
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 16 March, 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.”