Adam Tyler, chief executive of the NACFB, crunches the numbers over the Code of Practice in the UK
It isn’t easy to get excited about the launch of a new Code of Practice, but we’ve managed to do it. We’ve long talked about our nationally recognised and industry-approved Code of Conduct, which has been all well and good for 23 years. But of course these documents made no mention of the Financial Conduct Authority (FCA), nor did they have much to say on the intricacies of being an appointed representative.
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So although the underlying themes and values of the Code of Practice haven’t changed since the NACFB’s inception, the wording of our criteria and expectations has had to change.
A lot of what the FCA has to say can be translated as follows: the consumer needs protecting – from lack of clarity, from unreasonable costs, from a shortfall of knowledge about commercial finance per se.
The spectre of the refundable fee hasn’t been completely exorcised because it’s the sort of policy that appeals to the FCA. SMEs mustn’t, at any point of the process of applying for and arranging a commercial loan, feel like they are being mugged.
So say what you like about the frequent clarifications and amendments for FCA policy (we’ve had to make three amendments to our Code of Practice since the start of August) the heart is in the right place.
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By GlobalDataI’ve written elsewhere about our annual survey results for the period July 2014 to June 2015, so forgive me if you’ve seen some of the following figures elsewhere.
We keep our respondents fully anonymous, so we’re unable to comment on how growth has varied from region to region. But the NACFB has expanded by 14% since last year’s survey, so you would expect the ‘total business written by membership’ figures to increase by that value. Of course the ‘average deal’ and ‘number of deals’ figures don’t need any adjustment.
At its peak, business written by the NACFB membership exceeded 19bn in 2007; another year of even 20% growth will see us reporting that same figure in 2016 whether or not our membership levels grow at current rates.
Things were very different when we last hit those heights, and I wrote a couple of years back that we should not expect to match that £19bn (€25.9bn) value any time soon, as it was based on an industry doing unsustainable things.
Our industry’s approach now feels very different, with an attitude towards compliance and regulation that’s a world away from 2007’s overconfidence. From 1 July 2014 to 30 June 2015 our members completed deals totalling £15.982bn (£12.7bn in 2013-14), so we’re up 31% year-on-year (or up 17% factoring in a compensation for membership growth).
Commercial mortgages went up 54.9%, vehicle finance up 49% and leasing and asset finance up 47.7%. Clearly these growth levels far outstrip the increase in members. The ‘new types of business finance’ sector includes peer-to-peer, alternative funders, pension and cash flow funders. It’s another strongly performing branch of commercial finance, reporting figures that are 35.9% ahead of last year. But invoice finance is still ahead, having increased in value by 43.8%.
On the other hand, bridging finance is up just 1.2%, development finance up 3.2%, and buy-to-let up 10.2% – these are all actual declines when adjusted for member inflation. It does look like the commercial mortgages sector has found its feet and is effectively running to catch up.
