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FLA chairman urges consumer finance reform and clarity on EV funding

Richard Jones, Black Horse

The Finance and Leasing Association’s chairman has urged the sector’s regulators and policymakers to work more closely with the industry and ensure motor and asset finance is able to help the UK reach its zero emissions goal.

Richard Jones highlighted some inadequacies and inflexibilities of the Consumer Credit Act, such as it cannot allow for funding more than one asset if an electric car and its battery are separate assets. And he pointed out the £50 billion residual value risk in transport assets, from cars and motorcycles to trucks and aircraft, that FLA members bear while still awaiting long-term clarity on the Road To Zero plan and its implications for those assets.

“What happens if the political and regulatory worlds cannot deliver the clarity that business needs? The risk of volatile residual values goes up, so prices go up, customer and business affordability is impacted and we create real risks to the economy,” Jones told the audience at the FLA’s annual dinner last night.

The UK needs a managed, progressive transition plan to get to a net zero carbon economy, and that “gives the biggest issue of our time the respect it needs”, Jones said.

He reminded members that there is a Treasury consultation on the future of the financial services regulatory framework under way at present, and urged that regulation needs to create and support the right conditions for business, not impede it.

FLA members have concerns that regulation is bringing unintended consequences, such as the Financial Ombudsman Service redrawing legal interpretations and risking the setting of precedents that the Financial Conduct Authority has not intended.

“We urge regulators and policymakers to collaborate more and keep listening to industry as well as other stakeholders, to act on feedback, and above all, to ensure that the regulatory regime they design is proof against unintended consequences.”

And Jones, who heads Lloyds Banking Group's motor finance and leasing division, said the Consumer Credit Act is “the cornerstone of lending regulation” currently yet it is complex and long overdue for reform.

“Whether it is comprised of principles, rules or some combination of the two, it must provide certainty that firms can rely on. The CCA is too rigid to be the main regulatory regime that underpins the kind of product innovation that could help increase the uptake of low emission vehicles,” Jones said.

He said the Government's changes to end goals is “the easy part” but it must quickly “start building the road” to get there.

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