FLA chair
brings range of experience to help influence policy. Fred Crawley
reports.
Go deeper with GlobalData
Chris Sutton has been through a
steep learning curve in asset finance since assuming the chair of
the Finance and Leasing Association (FLA) in May. A retail and
private banker by background, he admits to being initially
surprised at how important the sector is to UK business.
“According to the Bank of England,
the majority of companies don’t borrow at all to invest – they use
their owners’ funds,” he says.
“So the majority of
externally-funded business investment in capital assets is made
possible through asset finance. That is a message the FLA wants to
emphasise in our work with the new government.”
FLA members fund between 20% and
30% of all business investment in capital assets in the UK.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
Learning curve
To be suddenly immersed in an
unfamiliar sector is a familiar situation for Sutton, who has
changed roles several times within the relatively short space of
eight years.
After 15 years of retail banking
with TSB group, in 2002 he took the helm of client facing business
for Lloyds TSB’s UK private banking arm.
Two years later he moved to run the
group’s expatriate banking business, which he transformed from a
low growth operation into one delivering income growth of 15% a
year.
Sutton was faced with an even
bigger culture shift in June 2008 when he was transplanted from
Lloyds TSB’s international banking division to manage its Black
Horse consumer finance operation.
Six months later he was tasked with
overseeing one of the most ambitious mergers asset finance has ever
seen: the absorption by Black Horse of Bank of Scotland’s dealer
finance unit in the middle of a global recession.
Impairment and bad debt levels at
Black Horse are now ebbing – faster than expected – after peaking
in the middle of 2009.
Lloyds Banking Group’s asset
finance division, comprising Black Horse and Lex Autolease,
recorded first half profits of £105m ($165m) in 2010. This compares
to a first half loss of £250m in 2009, and profit of £35m in first
half of 2008.
A full-year lending target of £3bn
shows that Sutton has every intention of maintaining Black Horse’s
market-leading position UK car finance.
Lobbying
government
At the FLA, Sutton’s agenda is to
promote asset finance as a primary source of business funding in
the UK.
“Business asset finance, including
commercial vehicles and business car fleets, is all about
investment,” Sutton says. “Politicians of all main parties want to
see investment happen because it creates jobs and helps the
economy.
“We don’t need to sway political
consideration, so much as demonstrate why some policies and
regulation could be better designed to support investment through
asset finance.”
He has found that it can be harder
to garner political support for motor finance than it is for
commercial finance, owing to the former’s consumer customer
base.
“Politicians seem to find it more
difficult to support investment if it is achieved by allowing
consumers to rent or pay by instalment,” he says.
“It becomes necessary to debunk
some of the myths about consumer credit.”
Consumer credit regulation
Sutton’s main objective for motor
finance in lobby terms has been to appeal for “breathing space” for
dealers, manufacturers and lenders.
The industry is braced for some
significant legislative changes, including the introduction of the
Consumer Credit Directive at European level, as well as publication
of the Office of Fair Trading’s Irresponsible Lending Guidance in
the UK.
No clear answer has yet emerged as
to which new or existing body will pick up responsibility for
consumer credit regulation in the UK. Sutton says he “welcomes the
Treasury’s view that any change must be made for the right reasons,
with clear benefits”.
In asset finance for business,
Sutton comments that there is less regulation of the selling
process.
“Issues in asset finance tend to
revolve around tax rules and accounting regulation,” he notes,
referring as an example to the lease accounting exposure draft
published in August by the International Accounting Standards
Board.
Overall, Sutton views the new
coalition government as an opportunity to promote commercial
finance and consumer finance to a wider business and domestic
customer base. Initial meetings have been “encouraging” and its
time to build “new bridges”.
He says: “The coalition is prepared to listen to business and
consider the consequences of policy and regulatory proposals, both
intended and unintended.”
