The number of non-bank, or alternative, lenders in the UK has grown significantly over the last decade and the range of businesses they support in the economy is wide, covering everything from mortgage and buy-to-let lending to P2P and asset-based finance.

Solid lending figures and numbers of lenders are hard to gauge, not helped by the fact that non-banks are not represented by any single trade body in the UK.

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In July 2018, the Daily Telegraph reported that lending and other financial activities offered by non banks was at least £2.2 trillion, according to estimates by the Office for National Statistics (the combined balance sheets of UK banks in 2018 was £12 trillion).

While many non banks are independent bodies and fund themselves on the wholesale market, a good number benefit from direct backing from traditional banks, publicly-listed parents or private equity interests.

Of the £140bn of new business provided by FLA members in 2019 approximately 32% was provided by non-bank lenders. The asset finance component (primarily leasing and hire purchase) of the total amount was £35.7bn. Non-bank finance is typically reliant on intermediaries for sourcing, filtering and arranging transactions.

In 2019, broker-introduced asset finance was up 9% (at £6.8bn) and was the fastest growing channel (compared with ‘direct finance’ and ‘sales finance’ channels, which grew by 5% and 2% respectively), according to the FLA.

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In March 2020, total asset finance introduced by brokers fell by 25% to £507m, against March 2019. The drop mirrors the decrease in new business shown across the asset finance sector as a whole where the total figure of £2.8bn for March 2020 represented a fall of 28% for the month.

According to Julian Rose of Asset Finance Policy (AFP), the number of ‘pure’ asset finance brokers in the UK today may be below 500, but brokers offering asset finance alongside other brokerage services are likely to number over 750.

AFP also found that the volume of leasing business done in the UK by non banks in 2018/19 was 31%, with the remainder being done by UK banks (53%) and international banks (16%).

According to the British Business Bank, “given both independent banks and non-bank finance providers typically rely on broker-driven models more than the big banks, the growth in broker-introduced business and the independents’ balance sheets appear to be symbiotic.” <