Last month, Leasing Life published an article
titled ‘What price a good reputation’ which explored whether the
industry, and the FLA, is doing enough to safeguard customers from
rogue suppliers. Here, the FLA’s Julian Rose gives his response to
the issues raised.
Go deeper with GlobalData
Readers of
Leasing Life will know that over the past year there have
been problems in the UK connected to sales-aid leasing into the
technology equipment market.
Reports involved vendors promising services
that were not provided, ‘overcharging’, and businesses being tied
in to leases for defunct equipment.
Fortunately issues like these remain rare
exceptions in an industry that serves at least 750,000 UK
businesses. The FLA business finance complaints scheme is widely
publicised and receives fewer than 100 complaints each year.
Most complaints that our members receive are
over minor administrative matters and are straightforward to
resolve. Many others refer to the fitness for purpose and the
satisfactory quality of goods being leased rather than the lease
itself.
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By GlobalDataBut there have been problems involving a small
number of vendors and the FLA has acted on the root causes.
The most significant change has been to revise
the FLA’s Business Finance Code, which sets the standards for most
lease agreements in the UK.
The code is now much clearer, shorter and more
principles-based. It reflects relevant parts of the Financial
Services Authority’s Treating Customers Fairly guidance
and Office of Fair Trading guidance on codes of practice.
FLA members are now accountable less for the
steps they take to comply with the code, which some would call
‘box-ticking’, and more for the cumulative effects of those
steps.
Key points
An article in March’s Leasing Life,
reported the changes made to the Business Finance Code but missed a
couple of key points.
The old requirement to check that prices paid
are fair has been widened to make clearer that the agreement as a
whole should be fair. And requirements which previously applied
only when leasing copiers now extend across all types of office
technology.
But the code is only one part of the FLA’s
response.
We revised our checklist for business finance
customers to emphasise the need for the customer to be comfortable
with the price of the equipment.
Our complaints handling process helps most
businesses who use it, and we also offer an independent arbitration
scheme. Our Code Group reviews and monitors the complaints handling
process and discusses some complaints with members.
We have developed guidance for members on how
to follow the code when working with businesses whose directors may
have less experience of leasing. We have developed guidance on how
to mitigate the risks of vendors or brokers bundling services
without authority.
And we have new guidance on which parts of the
code should be applied by vendors and brokers. We are working with
the NACFB to roll this out to their members.
We will continue to monitor the situation and
the work is not complete. But the vast majority of business finance
customers never experience any problems.
And when rare mistakes are found to have been
made, FLA members are dealing with them as efficiently and
sympathetically as the law allows, in the spirit of our revised
Business Finance Code.
Julian Rose is the FLA’s
head of asset finance
