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FLA vows to keep the cost of borrowing down

The Finance & Leasing Association (FLA), the voice of the asset finance and consumer credit sectors, is to lobby to cap the cost of public borrowing.

The association fears that Government moves to introduce increased consumer protection measures will lead to cost rises, hitting car buyers' pockets, unless accompanied by better data sharing and improved consumer education.

In his annual statement, FLA director general Martin Hall said that Labour's re-election meant the consumer credit industry faced a major political challenge to convince a sceptical audience that it delivered good products to properly informed customers.

“New Labour still professes commitment to competition and innovation,” said Mr Hall. “It recognises that firms lend money to make a profit, while it will insist on better protections for the vulnerable.

“The solutions lie through consumer education, professional marketing and better data data sharing. The industry knows it cannot resists all change, or be blind to powerful trends. We must be creative enough to ensure the Government does not let the protection of the relatively few hamstring a UK credit market which is highly responsive to vast numbers of satisfied customers.”

Mr Hall, who served on the Government's Ministerial Taskforce on Overindebtedness, added it was crucial to make it understood that it takes two parties to lend and borrow and said the FLA would press the message home in Whitehall and Westminster.

“If only the lender is committed, the cost of borrowing will inevitably rise,” he said.

Meanwhile the FLA is on track to repay the last instalments this year of £1 million of members' loans used to surrender the lease on former London offices.

With a membership which finances 28% of consumer credit and of fixed capital investment in plant and equipment , the association's improvements in finances came despite a mixed fiscal year. Asset finance grew modestly and consumer credit cards and loans produced healthy business to offset “dire” motor finance performance.

But in his outgoing address as chairman, Michael Brian was upbeat about the future, saying that the FLA had more than compensated for consolidations by recruiting new full members - including Motability Finance, Renault Financial Services and Honda - and reversing the annual decline seen since 1994.

“For its size, the FLA is a complex organisation which handles a vast range of issues,” said Mr Brian. “I am more than ever convinced that it forms a coherent whole, and that many concerns of the consumer credit industry - data sharing, fraud, regulation, customer protections, and transparency - are increasingly shared by the business-to-business sector.

“Members need an association which is intelligent, influential and quick on its feet. This what we try to be.”

Peter Miles, managing director of Lloyds TSB Leasing, has been appointed as the FLA's chairman for the year ending in May 2002. The chairmanship is renewable for a further term of one year.

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