As the credit, collections, and enforcement industry works to push even harder for strict compliance, a new piece of research will assess where creditors and collectors feel that they are, and whether the industry believes that it has the right tools for the job.

The research, which will be run by CCRMagazine and TriLine GRC, will ask crucial questions such as: what are the key regulatory compliance supervision challenges facing firms, how do firms currently manage and evidence FCA SYSC compliance and risk management governance controls, and whether firms are already in the process of implementing the FCA requirements under the SMCR.

Stephen Kiely, editor of CCRMagazine, said: “It is no secret that compliance is at the heart of everything that the industry does, it is a huge concern, which is why this month’s edition of CCR2 is covering this subject.

“But the practical reality is that ever more regulations are being placed on the industry so creditors and collectors will need to continue to adapt and evidence that they have complied in an appropriate way.

“This is an important piece of work, which we are proud to be collaborating with TriLine GRC on, and I hope that readers will want to take part in the survey.”

• To fill out the short survey, please go to this link. It should not take any more time than that and, as always, all responses will only be reported as aggregate figures.

The proportion of small businesses predicting growth for the next three-months has fallen to 34% – its lowest level for eight successive quarters and, for the first time, the proportion of businesses predicting significant expansion has fallen below 5%.

The new research from Hitachi Capital Business Finance asked a nationally representative sample of 1,184 small business owners to forecast their growth outlook for the three-month period to 30 June. Whilst the percentage of small businesses predicting growth held firm at 36% over the previous three quarters – through a period of extreme political and economic uncertainty – this month sees the first fall in the number of small businesses predicting any form of growth – whether significant expansion or modest, organic growth.

This time last year, the spring months saw an annual high in business confidence, as businesses started the new tax year with bullish plans for the year ahead. This spring, confidence is sliding.

Hotspots where confidence is falling

• Sole traders were least confident in their business outlook – only 28% predicted net growth for the period to 30 June, compared to 46% for those larger businesses with 10-50 employees. Similarly, sole traders were almost twice as likely to predict contraction than these larger firms (19% Vs. 11%).
• Transport, agriculture and hospitality were the sectors where businesses were least likely to predict growth – 25%, 27% and 29% respectively [see note to editors for full table]. Compared to three months ago, the sharpest fall in growth predictions was noted in the Transport/Distribution sector (down 13% to 25%).
• Significant variations were also noted by the age of businesses surveyed. Whilst young businesses in their first years of trading were those most confident in their net growth predictions (45%), older businesses that had been trading for 20 or more years were significantly less likely to predict growth (27%).

Asked what the barriers to growth where, market uncertainty (31%), unwillingness to embrace risk (17%) volatile cash flow (13%) and the cost of labour (12%) were all key factors. Further, when asked which initiatives small business owners were taking in order to secure future growth, key initiatives mentioned included: keeping fixed costs down (41%), improving cash flow (22%), tackling late payment (28%), expanding into overseas markets (16%) and investing in new equipment (12%).

On the upside, the north emerged as the country’s engine room for growth, with small businesses in the North West (43%) and the North East (41%) most likely to predict growth – compared to the national average of 34%. In contrast, small businesses in the west were the least confident: Welsh businesses were least confident about the future, closely followed by the South West – 23% and 28% respectively. In only three regions had the growth outlook of small businesses improved since the start of the year.

By sector, quite a lot of movement was noted since the start of the year. Despite a January of bleak trading announcements from the high street, the latest Hitachi Capital data reveals a sharp improvement in growth outlook from the retail sector among small businesses (up 9% on Q1 to 40%), with confidence in Real Estate rising by 17% since January. Conversely growth forecasts have fallen most sharply in the Finance/Accounting and Transport/Distribution sectors (falling 9% and 17% respectively).

Gavin Wraith-Carter, Managing Director at Hitachi Capital Business Finance said: “We are all living through a period of unprecedented uncertainty and, within that context, it is not surprising that small business confidence has taken a knock. It is too early to tell whether this is a short-term blip or the start of a trend.”

“The crucial subtext is how small businesses are reacting to how they are feeling. What is encouraging from our research is that whilst around four in five small businesses can identify current challenges, the vast majority are adapting by making new plans to achieve future growth. Investing in new equipment, expanding into overseas markets and tackling late payment are key issues that small businesses are prioritising to move their businesses forward – and now is a vital time for the banking and specialist finance community to be backing the small businesses that have the ideas, the plans and the passion to see market uncertainty as an opportunity to grow.”

The latest landlord research from Foundation Home Loans, the intermediary-only, specialist lender has revealed that of those landlords who intend to add to their portfolios over the next year, over half are likely to do so within a limited company vehicle.

Foundation says that the research – undertaken by BVA BDRC and carried out in March 2019 with the results based on 829 online interviews with landlords – also shows that portfolio landlords (those with four or more buy-to-let mortgaged properties) are even more likely to purchase via a limited company, with almost seven in 10 of landlords with more than 11 properties in a portfolio, intending to do so in this way.

Just over a quarter of landlords intend to remortgage in the next year, although this rises to one in three for portfolio landlords. 29% of all landlords took out a new remortgage in the last year.

The use of mortgage advisers by landlords to secure their property finance also remains strong, with the research revealing that seven in 10 landlords used an adviser to arrange their most recent mortgage, however 23% did deal direct with a lender. Foundation believes mortgage advisers could utilise a strong marketing campaign to secure greater activity levels with those landlords who have previously gone direct.

When asked how they had first come across their mortgage adviser, 44% of landlords said it had been through a recommendation, 13% through an internet search and 9% via membership of a landlord body.

The research also reveals a number of key financial measures with regard to the ‘average’ UK landlord – the typical one has 10 properties in their portfolio, over half of which are owned via a buy-to-let mortgage, with the average LTV of those mortgaged properties down below 50%.

The average market value of a portfolio is £1.4m with average gross rental income of £66k. The amount of borrowing for each landlord is £427k across their portfolio, although there is a marked difference between those who own only one to three properties (£334k) and those with more than four properties (£1.073m).

Finally, 19% of landlords said they had seen an increase in tenant demand over the last three months, down 5% from the last iteration of the research. 37% had seen no change, 21% had seen demand fall and 22% were unsure. Those landlords in the Midlands are currently reporting the strongest tenant demand in the UK.

Jeff Knight, Director of Marketing at Foundation Home Loans, said: “Overall the report back from landlords seems pretty positive albeit with obvious concerns about falls in tenant demand and how existing and future regulatory and economic change is going to affect their portfolios.

“What we are clearly seeing is far more portfolio landlords active in the sector, and while there has not been the great exodus that many were predicting, it’s less likely that those with only one or two properties are going to add to them.

“Overall, portfolio landlords are showing serious ambitions for the future, while holding relatively low levels of mortgage debt and therefore risk for lenders. The market value of their portfolios is solid as is their annual rental incomes and, looking at these numbers, it’s obvious to see why they stress they’re in this market for the long-term.

“When it comes to both anticipated purchase and remortgage activity, many landlords intend to do either or both within the next 12 months – which is clearly good news for advisers – and for purchasing especially this is now far more likely to be within a limited company structure, plus we have more landlords remortgaging properties out of their individual name into a company. Advisers do however have an opportunity to pick up more business, given that over two in 10 went direct to a lender for their last buy-to-let mortgage.

“The growth in portfolio activity certainly chimes with our own business results for April with 62% of all our mortgage applications coming from portfolio landlords and 53% for limited company business. Our focus therefore remains on ensuring that we support advisers with these clients with an easy-to-understand limited company/portfolio landlord proposition that takes away much of the administration demands and presents products with flexible criteria and highly-competitive rates which are not higher just because the client is utilising a limited company.

“We believe the market will continue to head in this direction and our specialist focus in this area will continue to help advisers who are likely to see a growth in client numbers over the months and years ahead.”

Foundation’s range of buy-to-let products for those who are purchasing or refinancing through a limited company is currently available up to 80% LTV, is offered at an ICR of 125 times the pay rate for five-year fixed rates, has no maximum age, accepts newly-incorporated limited companies, and has a maximum loan size of £1.5m.

The UK’s retail sector experienced big year-on-year growth in March, but department stores remain on red alert

The key findings from the Office for National Statistics showed

• In the three months to March 2019 (Quarter 1), the quantity bought in retail sales increased by 1.6% when compared with Quarter 4 (Oct to Dec) 2018, following sustained growth throughout the first three months of the year.
• All store types except department stores and household goods stores increased in the quantity bought in the three months to March 2019, when compared with the previous three months.
• The monthly growth rate in the quantity bought in March 2019 increased by 1.1%, with food stores and non-store retailing providing the largest contributions to this growth.
• Year-on-year growth in the quantity bought increased by 6.7% in March 2019, the highest since October 2016, with a range of stores noting that the milder weather this year helped boost sales in comparison with the “Beast from the East” impacting sales in March 2018.
• Department stores were the only store type to decrease in the quantity bought when compared with March 2018, with a fall of 0.3% in March 2019.
• Online sales as a proportion of all retailing increased to 18.6% in March 2019, from the 18.1% reported in February 2019.

Phil Mullis, Partner and Head of Retail and Wholesale at leading accountancy firm, Wilkins Kennedy, said: “These figures reinforce just how much of an impact last year’s ‘Beast from the East’ had on the UK high street; with this March’s mild weather helping strong year-on-year growth in respect of the value spent (7.3%) and the quantity bought (6.7%).

“Food stores contributed a significant chunk of this growth thanks, in part, to Mother’s Day (and food inflation), but on the flip side, people still aren’t going for big ticket items, which is driving the downfall at some household goods and department stores.

“The ongoing uncertainty surrounding Brexit and the fluctuation of the pound are some of the main reasons consumers are so reluctant to splurge at the minute.

“Given the volatility of the pound in response to Brexit movements, retailers importing goods would be wise to hedge against exposure to foreign exchange to aid budgeting certainty.

“While these statistics of growth are encouraging news for the sector, it was disappointing, yet hardly surprising, to see Debenhams enter administration.

“And finally, it is important to remember that retail isn’t dying, it is evolving to reflect what consumers now want when they are visiting the high street, and part of this process involves businesses either shutting down or receiving wake up calls to change and tailor their offering in order to survive.”