Decision on help for non-bank lenders looms. CCTA CEO, Greg Stevens quoted.
Industry News | 22/05/20
Doorstep lenders and other “alternative” credit providers to those turned away by banks have made a last-ditch plea for Bank of England support amid claims many could be on the brink of collapse. So-called shadow banks have said they urgently need access to government liquidity schemes in order to keep lending to cash-strapped Britons.
The sector boomed after the financial crisis as big banks avoided risky lending and is now used by around 1m businesses and 12m people. But it has received criticism for charging high levels of interest. After several weeks of discussions with the Treasury and Bank of England, industry bosses have been told a decision on whether support will be extended to alternative lenders could come as soon as this week.
A coalition of banking groups – including the Finance & Leasing Association (FLA), UK Finance and Innovate Finance – has presented solutions to address the funding squeeze. Alternative lenders have seen their usual funding streams dry up and a surge in forbearance requests in recent months. The coronavirus turmoil has locked them out of capital markets while funding from bigger banks has dwindled.
Greg Stevens, who runs the Consumer Credit Trade Association, argued that his members “can’t lend if they don’t have the funds to lend”, which could have catastrophic consequences for vulnerable customers.
“Banks won’t serve our customers – they never have and they never will. So restricting term funding to the banks does nothing for the millions of consumers who can’t access bank products,” he said. “The same goes for the specialist SME lenders. Same problem but the consequences are arguably worse – if these businesses go bust, the economic knock-on effect is huge.”
Source: The Telegraph
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