FLA response to the Spending Review

Commenting on the Chancellor’s Spending review, Stephen Haddrill, Director General of the FLA, said: “The creation of a National Infrastructure Bank and the £100 billion levelling up fund will help address long-term regional disparities in the UK.

“Our asset finance members are very well placed to help. Infrastructure projects by their very nature require specialist knowledge of the business sectors involved, and the region in which the work is to be done.

“Asset finance firms are already working with local authorities on numerous projects. Their expertise should be leveraged by Government as it rolls out its economic recovery plans.”

FSB in Scotland on spending plans

The Chancellor Rishi Sunak this afternoon outlined the UK Government’s spending plans for the year ahead.

Andrew McRae, the Federation of Small Businesses’ (FSB) Scotland policy chair, said: “For many Scottish firms wrestling with current covid restrictions, the Chancellor’s most significant and welcome recent spending decision was the move to extend the furlough scheme. While action to improve infrastructure – like Scotland’s substandard mobile network – should deliver long-term gains, we didn’t see many new measures today to boost small businesses in immediate crisis.

“Disappointingly, there was no decision to plug the holes in the current coronavirus support package and provide aid for the around one in five Scottish FSB members that have had little or no support from governments in London or Edinburgh. This omission needs to be tackled at the earliest opportunity.

“Local businesses will be crucial to tackling the unemployment crisis. We’d liked to have heard about a cut to employers’ national insurance contributions to help hard-pressed smaller firms create jobs and absorb the increase to the National Living Wage. That said, it’s only fair to acknowledge that the Government has listened to the expert Low Pay Commission, which is the right approach.

“Few can object to the volume of investment that city and region growth deals bring. But as our members and Audit Scotland have reported, these deals need to up their game. Specifically, we need to see more transparency, more input from nearby communities, and more local businesses winning associated work. If there’s a long-term future for these funding agreements, then they can’t be struck behind closed doors.”

Comment: Spending review – National home building fund “needs to translate into action”

Following the Chancellor’s spending review this afternoon, John Goodall, economist and CEO of buy-to-let lender Landbay, said: “In a year that has seen the highest borrowing in peacetime history, the housing market has held up remarkably well. Buoyed by the stamp duty holiday, demand to buy still outstrips the supply of housing by some margin, so the need to increase the housing stock grows ever more urgent. The Chancellor’s £7.1bn national home building fund is a step in the right direction but needs to translate into action, so we really see more homes being built and quickly.

“With unemployment to hit 7.5% next year and stamp duty reintroduced, it will be harder for many people to buy, but that doesn’t take away the need for housing. With councils and housing associations unable to meet this need, that demand will inevitably fall on the private rental sector instead. While the government needs all the income it can get, a tapering of the stamp duty holiday beyond 31st March and support for landlords to provide good quality rental property is what is needed to help meet this housing need as the need for rental property is likely to hit heights not seen in modern times.”

Comment: £1bn benefit fraud means UK must “invest into better systems” to protect public money

Following the news that fraudsters have taken advantage of looser rules around universal credit claims during the pandemic, John Dobson, CEO of anti-money laundering firm, SmartSearch, said: “This is yet another example of organised crime targeting government schemes during lockdown, following fraudulent claims on a massive scale against the furlough scheme, and the Bounce Back Loan scheme.

“This is public money that is being put at risk, at a time of unprecedented government borrowing to fight the impact of coronavirus. It took a junior civil servant to notice that many fraudulent claims were being made to the same bank account because the online verification hadn’t picked it up, or wasn’t being done. That raises the question as to why there aren’t more secure online processes in place to establish identity in government departments.

“The technology is available to make a remote ID check for an individual online in less than two seconds, and a check for business in less than two minutes, with bank account checks, facial recognition and document verification to add layers of security.

“These are browser-based systems that can be up and running within 24 hours. With the chancellor announcing his spending review today, perhaps he should look at investment into better systems for the DWP and Treasury to verify identity quickly and accurately online, and protect the public finances from fraud. This is a very small cost to protect billions of pounds of public money.”

Covid pandemic leads to deterioration of UK payment practices

Late payments have escalated since the onset of the coronavirus pandemic, reveals the latest UK Payment Practices Barometer by leading trade credit insurer Atradius.

The new Atradius report reveals that nearly half the value of B2B bills are being paid late, while half of the businesses surveyed have been hit by revenue loss and for every £100 of products or services sold, £8 is written off as uncollectable.

Sales on credit

The Atradius UK Payment Practices Barometer reports as much as 60% of the total value of B2B sales in the UK are made on credit with 43% of businesses increasing the amount of sales made on credit by one third since the pandemic began. The primary reason for offering credit is to stimulate sales in the domestic market, reported by two thirds (65%) of businesses. A quarter (24%) of businesses said they grant credit to stay competitive but more than one in 10 (11%) said they did so to provide a source of short-term finance to B2B customers. However, more than a third (38%) of businesses said they had needed to turn down requests for trade credit due to a worsening in customer payment behaviour.

Late payments rise

Since the onset of the coronavirus pandemic, the proportion of late payments has increased. UK businesses report 47% of the total value of invoices are paid late. This is a significant increase of 81% compared to pre-pandemic levels when 26% of invoices by value were paid late. Nearly half (45%) of businesses also now report waiting an average of 20 days longer to turn overdue invoices into cash; longer than just 14 days last year.

Risk of non-payment

UK businesses report 5% of the total value of receivables was still outstanding at 90 days. However, the longer receivables remain unpaid, the lower likelihood there is of collecting them with businesses losing an average of 63% of the value of receivables which were not paid by the 90-day mark. Worryingly, as much as 8% of the total value of receivables was written off as uncollectable since the onset of the pandemic; equating to £8 in every £100 billed.

The Atradius Payment Practices Barometer found half of UK businesses experienced revenue loss following the onset of the pandemic and more than a third (39%) reported cashflow difficulties as a result of increased payment defaults.

Pandemic changes payment terms

The economic climate since the Covid-19 pandemic began has prompted extensions in payment terms with more businesses offering customers longer to pay. Nearly half (48%) of businesses surveyed have granted extended payment terms, giving their customers an average of 30 extra days to pay. While last year, 91% offered maximum 30 day payment terms, during the pandemic this dropped to 78%, with 14% offering terms of 31-60 days (up from 8% last year) and 4% offering 61-90 days (up from 1% last year). And while last year no businesses reported offering terms of over 90 days, during the pandemic 4% admitted they had done so.

The main reason cited for lengthening payment terms was to encourage sales on the domestic market (36% of businesses) while a quarter (25%) did so to provide short-term financing for customers in financial distress. However, Atradius warns this approach can be risky as businesses may incur financial and administrative costs by tying up their money in receivables.

Business response

To avoid liquidity shortages, nearly half (48%) of businesses increased time, cost and resource to collect outstanding invoices while more than a third (39%) reported more frequently sourcing customer credit information to assess creditworthiness. Nearly half (49%) of businesses now send more frequent outstanding invoice reminders while nearly two-thirds (64%) offer discounts for early payments, while 46% plan to use credit insurance to protect themselves from non-payment.


Although the pandemic inevitably creates uncertainty for recovery and future growth, respondents to the survey indicate that business optimism prevails. At least half of the UK businesses surveyed believe customer creditworthiness will improve next year and more than half (55%) expect the domestic economy to improve, while 48% expect improvement in the global economy. 51% anticipate international trade to grow next year. However, despite these levels of optimism, concerns over the pandemic and consequent recession remain in particular the potential threat to business profitability. 43% predict a fall in demand will be the greatest challenge to business profitability next year while 39% believe the challenge will be centred on maintaining adequate cash flow.

James Burgess, Head of Commercial for Atradius UK, commented: “The Covid-19 pandemic arrived at a time when the business community in the UK was already working hard to accommodate the challenges and uncertainties posed by Brexit. For some industries, such as retail and automotive, the lockdowns and disruptions to supply chains have added further stress to sectors that were already grappling with structural challenges, such as migration towards online shopping and electric vehicles respectively.

“While the Barometer indicates a degree of optimism within the business community, the next six months present a critical time for firms across all sectors. While uncertainty surrounding the progression and consequences of the pandemic continue to weigh heavily we are also now close to December 31 and the end of the Brexit transition period. Businesses will need to be prepared for further challenges and take steps to protect their receivables while also seizing opportunities to trade and grow.”

FICO urges consumers to watch out for Festive Fraud

Christmas sits at the end of the calendar as a bright, gleaming target … for fraudsters. Each year, consumers across the country scramble to find the perfect gifts for friends and families. Shopping centres and high streets are flooded with bargain-hunters as the festive spending commences with Black Friday sales. But while this year will differ for a range of reasons, what remains the same is criminals searching for opportunity.

Even if the UK emerges from its second lockdown on 2 December, fraud experts at global analytics software provider FICO still predict significant growth in e-commerce. Previous high levels of festive footfall will become hours of screen time as consumers scroll through page after page for the best deals. And with this ever-increasing amount of time and money spent online, fraudsters have an abundance of opportunity to steal personal data and funds.

UK Finance reports over £27m was lost to fraud at online marketplaces and auction websites in the first half of 2020, averaging at a loss of £720 per case. Its latest intelligence shows a recent rise in purchase scams on Christmas gifts and home improvement products.

To help educate and protect consumers, Matt Cox, managing director, EMEA, Fraud, Cyber and Compliance at FICO has outlined his top five tips and best practices to stay ahead of fraudsters.

Top tips to combat festive fraud

Revisit password habits

It turns out that long passwords are even more important than strong passwords. The length and strength of a password, combined, is the strongest deterrent to a hacker cracking your password with brute-force computing power. It’s also important is to use a unique password for each of your accounts, particularly important ones; not just bank accounts but PayPal, Klarna, Gmail and Amazon.

Take advantage of additional authentication features

Make use of any additional authentication capabilities offered by apps and websites you visit frequently. The easiest type to use is a one-time use passcode, which can be texted, emailed or pushed via an app. You can also use hard token code generators where they still exist.

Use trusted payment methods

Do your research, read the reviews, and check Google carefully to see if the app is a scam. If in doubt, use well established methods like PayPal, Apple Pay, Amazon pay, Ideal and any other local providers.

Be sceptical

It’s the season of giving. And during a pandemic fraudsters are bound to capitalise on the opportunities to scam the most giving and caring. Although GoFundMe states that “the overwhelming majority of fundraisers on our platform are safe and legitimate,” scams do happen there and many other places. To protect yourself from charity and disaster relief fraud make sure the donation website is legitimate. It’s very easy for criminals to create lookalike websites that siphon off credit card and personal information, which can then be quickly used to run up fraudulent transactions.

Monitor credit report and bank balance

Everyone needs to monitor their credit reports and their finances. Not just to stay informed about credit history, but also to spot anything suspicious as quickly as possible.

Terrafirma launches first ever climate-focused ground risk assessment

Terrafirma, the leading experts in ground risk assessment, today launches the National Ground Risk Model (NGRM): Climate™. This provides lenders with an expertly modelled, ground risk dataset, to help them understand how ground risk may impact their mortgage book under a changing climate.

NGRM: Climate includes the UK’s first ever map of ground risk data. For the first time, this enables lenders to understand the risk to the properties they lend against as the climate changes.

It will also enable lenders to meet the demands of the Bank of England and the PRS under its 2021 Biennial Exploratory Scenarios (BES) to understand climate-related financial risks.

The objective of the BES is to test the resilience of banks, insurers and the financial system to different climate pathways, which lenders need to prepare for by June 2021.

NGRM: Climate provides unparalleled analysis of future ground risk. It will meet the Bank of England’s requirements by providing a model of how ground risk will change in low, medium and high emission scenarios in the short-term (2020-2040), medium-term (2040-2060) and long-term (2060-2080). A ‘present day’ baseline provides a clear picture of ground risk today and forms the context for the projected changes.

NGRM: Climate has been developed by geologists, soil scientists, engineers and geospatial data analysts using Terrafirma’s National Ground Risk Model™ – the first map of all major ground instability risks in Great Britain.

The development of the National Ground Risk Model™ makes it possible to instantly access ground risk information for every property, parcel of land and asset in the UK. It enables scalable, cost-effective and instant analysis of ground risk on all 29 million properties, 50 million structures and 30 million land parcels in the UK. This provides a proven baseline to understand how ground risk can impact property. It will revolutionise how industries from lending and insurance, to construction and property developers, make decisions about property, land and assets.

It combines geological, soils, mining, coastal erosion, landslide and climate data with nine of the Met Office’s UK Climate Projections (UKCP18) emissions scenarios and provides lenders with easy-to-understand risk scores. This will provide expert insight into ground risk severity at single property or land parcel-level. It also includes a new coastal hazards model, which clearly illustrates the projected impacts of rising sea levels and increased erosion on coastal property and land.

Tom Backhouse, Terrafirma CEO and Founder says, “The release of the NGRM: Climate is a game-changer for understanding ground risk. It dramatically improves the quality, availability and accessibility of ground hazard and risk information for lenders.

“Across the UK, homes, infrastructure and land are at risk from complex ground hazards that can remain hidden for years. Every day decisions worth millions of pounds are being made without true understanding of the consequences of these hazards, so Terrafirma set out to improve understanding of the ground and the complex ways it interacts with the built environment.

“We have worked on NGRM: Climate for 18months to provide the first commercial model of its kind. The model has been engineered by geologists, soil scientists and geospatial data experts. It provides a foundation for lenders to make decisions with a greater understanding of the ground and issues that can affect the value of the property they are lending against, in a manner that is easy to understand. This will help them to make informed decisions without needed to be ground risk specialists themselves.”

Japan’s GDP growth will fall again in Q4 in spite of growing export economy, says analyst

Exante’s senior analyst, Victor Argonov says that whilst Japan’s third quarter GDP growth paints a strong rebound of the Japanese economy – its economy expanded by 21.4% quarter on quarter, the highest rate recorded since 1980, it’s worth noting that in the preceding quarter, its annualised GDP growth set an anti-record – collapsing to -28.8%. Therefore, quarter four growth is not likely to be as good.

Victor Argonov, says: “Japan’s real GDP is still way below its pre-Covid size. Given that Japan’s economy had also shrunk by 0.6% quarter on quarter in 1Q, Japan’s economy at the end of September was still 3.9% smaller than at the end of 2019.”

“The breakdown of GDP by expenditure shows that net exports and consumer spending were the main locomotives of growth in 3Q. Exports were up 7% quarter on quarter, following a 17.4% quarter on quarter contraction in 2Q. We calculate that the increase in net exports accounted for nearly 3ppts out of the 5% growth in GDP in 3Q. Expansion in household consumption was responsible for the remaining 2ppts,” adds Mr Argonov.

“The most recent foreign trade statistics have also been relatively upbeat. October exports were only 0.2% lower than in October 2019, which marked a substantial improvement vs the September reading of -5%yoy. The improvement likely reflects the recovery in external demand for Japanese products. What are the reasons for the quick recovery in export demand, and will it last?”

“The return of demand strength in Asia is an apparent reason why Japanese exports have been doing well and driving the country’s economic recovery. The Chinese economy is on track for posting positive growth this year. Before the Covid pandemic, China used to consume nearly 20% of Japan’s exports. Other Asian countries (South Korea, Hong Kong and Thailand) also were among top five destinations for Japanese exports, with the shares of 7.1%, 4.7% and 4.4% (source: UN Comtrade). If Vietnam, Singapore, Indonesia and Australia are included in the group, it turns out that Japan would generally send more than 45% of its exports to it,” he adds.

“It is worth noting that motor vehicles are the largest item of Japan’s exports (13.4%), with auto parts and accessories accounting for another 5%. In this context, the rapid recovery of auto demand in China, where auto sales were up 12.4% year on year in October, should ensure further growth in Japan’s automotive exports in the coming months,” says Mr Argonov.

“Japan’s exports to China increased by 10.2% year on year in October. Looking at the breakdown, we see that the fastest-growing items included cars, plastics, and also the equipment required to manufacture semiconductors,” says Mr Argonov.

“However, while export-oriented sectors of Japan’s economy seem to be on track for fast recovery, those based on face-to-face client interaction may be not entirely out of the woods. Just like the UK and the EU, Japan has distinct seasons and is located in the Northern hemisphere. For this reason, there is a risk that Covid-19 cases will rise during the regular flu season it is currently entering. Also, the third wave of Covid-19 affecting the country may dampen consumer confidence. For this reason, GDP growth numbers in 4Q are unlikely to look as stellar as the 3Q ones,” he concludes.

Landbay exceeds 5,500% growth in revenue

Landbay, one of the UK’s leading buy-to-let lenders, has achieved 5,520% growth in revenue from 2016 to 2020, lending over £0.6bn during that period. This massive growth has landed Landbay at number six in the Deloitte UK Fast 50. Landbay is the top ranked mortgage lender and is listed as the third fastest growing FinTech business in the country.

Over the past three years Landbay has been building momentum with 2020 marking the third year in a row it has featured on the UK Fast 50. Reaching number 20 in 2018, number 28 in 2019 and now number 6 in 2020.

The Deloitte UK Fast 50 is one of the UK’s foremost technology awards programmes. The ranking is based on revenue growth over the last four years and recognises the 50 fastest-growing technology companies in the UK. The UK Fast 50 awards are all about growth driven by leading intellectual property and are a celebration of innovation and entrepreneurship. Reaching the top ten in the Deloitte UK Fast 50 is a major achievement and shows Landbay clearly outstripping the rest of the buy-to-let market in terms of growth.

Last week Landbay also announced a major additional funding deal with a leading international asset manager worth £300m a year which will enable it to expand its lending further still. This deal is in addition to the bank funding deal that Landbay announced in July and the £1bn funding deal it announced in mid-2019. This makes Landbay one of the most diversely funded buy-to-let lenders in the UK, with funds from an investment bank sponsored securitisation programme, as well as from deposit taking banks.

Landbay has ambitions not only to increase lending but to also change the way that buy-to-let lending is carried out. It uses cutting edge technology to streamline the lending process. Landbay’s origination process is all online via its bespoke platform and is 100% paperless with e-signatures and micro services. Landbay’s process is all cloud-based and scalable, allowing it to turnaround every enquiry in under 72 hours, significantly faster than many of its competitors, while still offering highly attractive pricing.

Landbay was Amazon Web Services’ first case study as the first 100% cloud-based firm to be fully FCA authorised. Despite this online approach, Landbay still provides a bespoke, flexible service with personal interaction with clients and intermediaries.

Julian Cork, COO of Landbay, said, “The huge growth we’ve achieved is a testament to how hard our team has worked over the past four years and the excellent intermediaries we work with. We set out to become the leading customer services company designing better ways to buy-to-let and this recognition from Deloitte shows we are well on the way to achieving this.

“The key to our success is our scalable, technology enabled and service-focused lending platform. We designed process and systems that means we can do things faster and more efficiently and crucially, provide a better experience for intermediaries and their clients.

“While the growth of Landbay is incredibly important, we also want to help change the shape of the whole buy-to-let industry providing intermediaries with a vision of what lending could and should look like.”

The Deloitte UK Technology Fast 50 is part of an international programme run by Deloitte and qualifying entrants of the UK Fast 50 will be put forward to the Deloitte Technology Fast 500 EMEA (Europe, Middle East and Africa) programme. Previous winners have come from across the UK, are both large and small, and included some of the most dynamic players in all areas of technology, from internet specialists to biotech, digital media technology to life sciences, computers to semiconductors and software to telecommunications.

GHL Direct sign-up for Credit Assess

FinTech company, Click2Check, has today announced GHL Direct as the latest advisory firm to sign-up for its Credit Assess product – the white-label online solution for mortgage advisers to obtain credit scores, reports and Open Banking data in order to help pre-qualify clients.

National advisers, GHL Direct – a trading style of GHL Network Services Ltd and an AR of Openwork – is the latest advisory practice to have signed up to take Credit Assess allowing all its advisers to access, with the consumer’s consent, their online credit scores and digital reports, while using Open Banking technology to deliver bank statements in minutes.

GHL Direct said that, in its trial of Credit Assess, it had saved a considerable amount of time and money by using the product and had seen significant benefits in reviewing any credit and finance issues upfront, ultimately allowing it to move the case to completion far quicker than if its advisers had been required to secure all the necessary documents manually.

Credit Assess provides the adviser with full access to up-to-date credit scores and reports, providing the consumer’s credit report and banking information securely within minutes.

It also comes with an API function allowing firms to feed the credit report and bank information into their third-party proprietary software such as point-of-sale and CRM systems.

Michael Taylor, Director of Sales at Click2Check, commented: “When launching Credit Assess we always felt it would be a game-changer for advisory firms because of the control it gives them and the benefits of having a client’s full financial details and credit status in an instant. That’s certainly the feedback we’ve been getting from GHL Direct and we’re very pleased to announce them as the latest practice to sign up to the product. In a very changeable environment, having full transparency of a client’s financial situation at the start of the process, should ensure the adviser doesn’t need to go down any blind alleys. We’re looking forward to working with Nigel and the full GHL Direct team to ensure they get the most out of Credit Assess both now and in the future.”

Nigel Gardner, Director at GHL Network Services Ltd said: “As soon as our GHL Direct advisers began trialing Credit Assess we were able to see an immediate difference in terms of how quickly they can progress cases having the full, up-to-date picture of a client’s credit report and their banking information. As a business we’ve always been fully supportive of new technology that allows us to improve the quality, speed and accuracy of the advice process, and Credit Assess certainly fits into this space. Talking to our advisers who have already used the product, we’ve been made aware of the time that it can save and how much easier it makes their job, particularly when it comes to product sourcing. For all those reasons, and more, signing up to Credit Assess was an easy decision to make and we’re confident all our advisers, and their clients, will benefit from being able to use it.”