Growth needs a lending environment lenders can rely on

The Budget commits £20.4bn of public capital to lending — welcome money. A reliable lending environment would help it unlock more private investment.

Everyone is asking where growth will come from. The FLA and Leaseurope. Simply Asset Finance also put out a press release about it this week. And it is the theme of Finance Connect’s conference in London on 24 November.

The FLA has suggested government should help capital reach firms: a Productive Finance Partnership bringing together the British Business Bank, institutional investors and specialist lenders; an industry-funded Ready for Finance service to help businesses prepare to borrow; and a modernised Consumer Credit Act. Responding to this week’s Budget, its chief executive, Shanika Amarasekara, said the test is not how much public money government commits but how much private investment it unlocks — public finance should be “a catalyst for private investment, not a substitute for it”.

Simply’s Ylva Oertengren has suggested government should help SMEs by cutting the cost of running a business: targeted relief on national insurance, duplicate reporting removed, compliance simplified, and investment incentives stable enough to plan around.

To these suggestions Finance Connect adds a third. Government should help lenders by creating a lending environment they can rely on. Lending is becoming riskier, and part of that is the state’s doing.

Motor finance redress showed lenders that they can face compensation bills for business done twenty years ago — business that was, at the time, understood to be lawful by lenders and the regulator alike. The scheme is the first attempted at this scale. It is being contested in court, and parts of it are suspended while the challenge is heard. No firm can say today what the final bill will be, or what standard it will be measured against. This week’s Budget added an example of its own: more public capital for lending through the British Business Bank, and a higher tax surcharge on the banks expected to do the lending.

The effects are showing.

Lenders behave defensively. Finance Connect’s survey of asset finance leaders, run this autumn, suggests this is already happening: around 60 per cent expect to beat the market and none expects to grow more slowly — but the growth they expect comes from winning other lenders’ customers and from a rising economy, not from new products or new markets, which they rank bottom. A market that has watched the motor finance scheme has good reason to treat product innovation as risky.

SMEs pay more to borrow. A risk that cannot be priced does not disappear; it goes into the margin. The customer ends up paying for the uncertainty.

And investors think twice. Money that cannot predict how UK lending will be judged will ask a higher return for backing it, or go elsewhere. Every major forecaster already has UK business investment falling this year, with a recovery next year that does not recoup the fall.

The good news is that this is fixable, and the cost of fixing it is low. 

The Budget’s answer to the growth question is £20.4bn for the British Business Bank and the National Wealth Fund, spread over years and funded by borrowing. Compare that with what lenders already do: FLA members wrote £163bn of new finance last year and financed more than a third of UK investment in machinery, equipment and vehicles. A reliable lending environment acts on all of it — and makes the Budget’s £20.4bn work harder too.

Much of the machinery is already being built. The Consumer Credit Act is being rewritten, replacing rules drafted for paper agreements in 1974 with rules written for lending as it is done now. And a reform of the redress system is going through Parliament in the Financial Services and Markets Bill: where a firm complied with FCA rules as they stood at the time, the ombudsman must find it acted fairly; where a rule is ambiguous, the ombudsman must ask the FCA what it meant. Law, regulation and ombudsman are being lined up to apply one standard, fixed at the time the business is done.

What is still missing is reassurance about redress at scale. The same reform makes it simpler for the FCA to launch a mass redress scheme, and nothing yet says that lawful business cannot be swept into one on standards set later. Government and regulator should say it. Lenders, and the investors behind them, need to know that nothing on the scale of motor finance can happen again.

Lenders have their own side to hold up. Wayne Gibbard of Shoosmiths, closing the FLA’s regulatory briefing this autumn, told firms to invest in evidence — to be able to show what the customer was told, what was considered and what was decided — and to understand their place in the distribution chain. Rules fixed at the time only protect firms that can show what they did at the time.

On 24 November in Kings Place, London we put these points to the industry — alongside the opportunities in new markets, new channels new products and the use of new technology including AI.

View the full Finance Connect UK Autumn Conference 2026 agenda here.

Register here: https://afcconferenceuk.com/financeconnectautumnconference2026/en/page/book-now

The Finance Connect UK Autumn Conference 2026 is supported by Odessa as Event Partner, with Alfa as Headline Sponsor of the Asset Finance community stream and Dancerace as Headline Sponsor of the Receivables Finance Connect Conference.