Fraud is a topic that the UK asset finance industry
would rather avoid, in more ways than one. Of course, leasing
companies want not to become victims of fraud. The FLA’s Fraud
Intelligence Sharing Scheme is a good attempt at trying to protect
funders against malign applications.
But when it comes to vendor finance
programmes, where funds are transferred on trust to a partner
company, how can a leasing provider be sure where the money is
being channelled?
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In the case of KBC Lease UK, £133m
(€157m) of the bank’s cash has been spirited away. Investigations
continue as to the whereabouts of much of it.
Observers have commented that blind,
or arms length, funding is to blame. Where the leasing provider has
no direct relationship with the end user, it’s easy to see how
opportunities for would-be fraudsters might arise.
An innovation like The Asset Works’
tagging system, which uses GPS technology to keep tabs on moveable
assets, can help the industry to defend against fraud.
But even this cutting edge approach
would have struggled to protect the leasing provider for contracts
on cables laid deep underground.ms are still to be repaid on
contracts written by Total with broadband cable vendor H20
Networks.
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By GlobalDataVendor programmes can be hugely
lucrative for funders. Vendors provide a strong route to market,
and can bring their own asset and market know-how into the supply
chain.
Many of the bank-owned leasing
companies covered in this edition of Leasing Life cite
vendor business as an integral part of their business mix.
The strongest vendor partnerships rely
on trust between funder and vendor, and on building a mutually
beneficial relationship with the end user.
The customer gets his asset, the
vendor his sale, and if things work out right, the funder makes his
return.
In this ecosystem, relationships
count, even if the funder’s role is to take a back seat and to
allow the vendor to front the deal.
The more knowledge about partner
companies that leasing companies can have, the more protected they
are against potential misdeeds.
Blind funding might offer the
temptation of big volume with little overhead, but can leasing
companies really afford to take the risk?
Liz Bury
