Memorandum by Finance & Leasing Association
1. FLA (Finance & Leasing Association)
is the main representative organisation for the UK consumer credit,
motor finance and asset finance sectors. Our members comprise
banks, subsidiaries of banks and building societies, the finance
arms of leading retailers and manufacturing companies, and a range
of independent firms.
2. The facilities provided by FLA members
include finance leasing, operating leasing, hire purchase, conditional
sale, personal contract purchase plans, personal lease plans,
secured and unsecured personal loans, credit cards and store cards.
3. FLA members achieved £87.3 billion
of new business in 2005. Of this, £27.2 billion was provided
to the business sector and UK public services, representing over
30 per cent of all fixed capital investment in the UK in 2005
(excluding real property). The remaining £60.1 billion was
provided to the consumer sector, and FLA members represented 25.5
per cent of all unsecured lending in the UK. In the above total
is £18.6 billion of finance provided to the motor sector.
FLA members financed at least 50 per cent of all new car registrations
in the UK in 2005.
4. FLA, as part of the UK Cross-Industry
Group, twice gave evidence to the Sub- Committee Inquiry into
the EU Consumer Credit Directive in 2005 and 2006.
5. FLA welcomes the opportunity to contribute
to the Sub-Committee's Inquiry. According to the Office of National
Statistics, one in six people experience some kind of mental health
problem at any one time. This can cause many difficulties, especially
in managing finances and debt.
6. FLA is well placed to help promote to
the lending industry the interests of vulnerable groups. In November
2005, FLA produced a film and training materials entitled "Money
Worries" aimed at improving the advice and support offered
by finance providers to those with mental health difficulties
and debt problems. This was launched in Parliament at an event
hosted by Mark Lazarowicz, MP. Produced in partnership with Citizens
Advice the package highlights what lenders can do to ensure they
respond sensitively, appropriately and fairly to those in financial
difficulty and how best to raise awareness with front-line staff
and those engaged in debt collection.
7. This initiative was our response to Citizens
Advice's April 2004 report "Out of the Picture", which
highlighted the experiences of people with mental health problems
in a variety of social contexts including access to the benefits
system, employment and financial problems. The material is primarily
aimed at raising the profile of the issue of mental health and
debt problems with lenders and Citizens Advice Bureaux and enabling
them to adopt a more practical approach to making the experience
better for consumers.
8. We believe that the initiative also played
a role in helping raising the profile of the inter-action that
can exist between mental health and debt problems. Mentalhealth
difficulties can lead to a range of problems in someone's life
and their relationships with others. It will often cause problems
with their employment and their ability to manage their money.
For many people, debt problems can arise as a result of their
illness, for others debt problems can cause stress anxiety and
lead to health problems.
9. We enclose a copy of the pack, press
release and frequently asked questions together with FLA's Lending
Code, section 1C.5 (on page 13) of which requires FLA members
to take particular care if the consumer is suffering from health
problems, including mental health difficulties. As far as we know,
such a commitment is unique to the Lending Code.
10. FLA has also sponsored a booklet on
mental health and financial difficulty (enclosed), launched on
20 July 2006, and produced by the Royal College of Psychiatrists.
It aims to provide sound and practical advice for psychiatric
nurses on dealing with client debt. This initiative acknowledges
FLA's growing commitment to meeting the needs of customers with
mental health problems. We have recently committed to funding
a second print run of 18,000 copies due to overwhelming demand
for the first 13,500 copies.
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