‘We came together so well in a remote circumstance’

In the midst of a crisis often all you can do is to react to the situation as best you can, and whilst we all had disaster recovery plans, I expect nobody had a playbook for what unfolded, or at the speed at which it unfolded. I’m not going to cast back to all the events of the last 13 months, which at times has felt like 13 years, but it’s great to be at a point that we can actually assess how collectively we’ve coped, and I think we did rather well. 

FLA members, including those lenders here tonight, reacted very quickly to protect those customers impacted by the pandemic and the ensuing lockdowns, and our associate colleagues stepped forward to provide all manner of expertise to the FLA – from IT, to data sharing to technical input – and all those things came together to really help shape our response. I think our resilience and our responsiveness as an industry came about because we came together so well in a remote circumstance.

In times of adversity, trade associations can often come into their own. I wouldn’t have wanted as a leader of an individual firm to try and navigate my way through this last year on my own with no sounding board, no industry radar, no shared experience and no best practice and above all no insight on the wider political and regulatory engagement that’s so essential to navigating such a set of events. Vacuums just don’t work very well in a crisis. 

And I think the FLA colleagues, and many are here tonight, will probably interject at this point and say that ‘a trade association is as strong as the members who engage with it’, and our members were more engaged than ever before over the last year despite all facing their own business problems and emergencies. 

The FLA team regularly found themselves hosting meetings with more than 200 members present and using that engagement to rapidly feed back to HM Treasury, the Bank of England and to the FCA [Financial Conduct Authority] what we needed to do, for example to improve making funding schemes more effective, and what was workable (and what was not) on forbearance guidance. 

And it is no mean feat to collate input from groups of that size and process it into coherent and compelling industry feedback, but that was done.  And, judging by the traction we gained on a number of fronts, with the regulators, the Bank and the Treasury, they have taken on board many of the points we made and hopefully, collectively we were more successful getting through this pandemic as a result of all of that. 

One thing that came back onto the agenda quite a lot, was CCA [Consumer Credit Act] reform. Members’ candid reports of the obstacles that you faced when trying to put in place solutions for customers in need of help laid bare some of those inadequacies that we know have been present in the CCA for some time. 

The FLA has been resolute in its stance that doing nothing is not an option anymore, and we mustn’t let reform be kicked into the long grass, and the tide on that seems to be turning in favour of reform. 

The recent Woolard Review has recommended changes to the CCA and the FCA has accepted that point. Crucially, HM Treasury has also accepted the need for change and given that much of the CCA is founded in primary legislation, a meeting between the FLA and the Treasury is in the offing soon. 

I think the Covid crisis also exposed some gaps in the funding mechanism that the government uses to maintain liquidity in the banking system, and whilst all banks are lenders, not all lenders are banks. That’s a point the FLA brought home successfully in its feedback to the Treasury through 2020. Our broad membership includes non-bank independent lenders who were locked out of the Bank of England’s Term Funding Scheme. 

The FLA has pointed out the inequity of this and the effect on consumer groups, such as SMEs, that use and rely on those specialist finance markets that are not served by the big banks. And this gap needs to be plugged, so the FLA has recommended to government a liquidity scheme that can be switched on for this cohort in times of need in the future. 

Our industry’s relationship with the Financial Ombudsman Service (Fos) has not always been an easy one, and as we exit the crisis and hopefully get into calmer waters the FLA wants to help reset this dynamic into one that is pragmatic and candid and fair to consumers and to lenders. 

To that end, the FLA would like to see the creation of a new complaints forum to share more detailed insight on complaints trends and to help the industry work with the Fos on the Holy Grail of pro-active prevention and to try and minimise some of the reactive intervention that we get which is frustrating and often costly to the industry. 

There’s one issue that will probably dominate the future more than any and that’s the global climate emergency and the upcoming COP26 summit in Glasgow later this year. 

The FLA’s evolving net-zero strategy is already up and running. We have formed a productive partnership with the Green Finance Institute and the Zemo Partnership (formerly the Low Carbon Vehicle Partnership). We’re putting forward a compelling case for a green finance guarantee that will put more competitively priced finance in front of customers. 

We want to make green choices affordable to more people and we think that’s an essential underpin to the kind of scale that climate change and sustainability ambition-achievement that we want to see, particularly in the next decade.

One of the quotes that stayed with me on climate change comes from that climate ambassador Sir David Attenborough, who recently said that tackling climate change will make tackling a global pandemic look relatively easy, and I think he is right. 

The funding market – of which the FLA represents over £120bn of lending commitment each year – must take leadership roles in decarbonisation. It will be the most challenging and the most complex goal of our lifetimes, but it should also be the most rewarding and the one that will hold the most lasting impact. 

Influencing the shape and direction of government policy, or regulation, is never easy and it is never an exact science. 

Your input has helped the FLA take significant strides towards improving the business environment, but we’re certainly not out of the woods yet and when it comes to negotiating our way through the recovery, from the pandemic, we need to apply the same collegiate mindset that’s got us through the crisis, and I know that the FLA has set about ensuring that we try to do that and that we play our part. 

This is a transcript of a speech delivered online at the annual gathering of the FLA on 22 April 2021