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More leasing variations on BBC R4
Julian Rose, Head of Asset Finance at the Finance and Leasing Association (“FLA”), put up a solid defence for leasing and asset finance on Radio 4’s The Report programme, but could have been given more opportunities throughout the programme to comment on issues as they arose. He was up against the combined fire power of Adrian Goldberg, investigative radio journalist, plus recorded excerpts of unflattering remarks about the UK leasing industry by Brendan Malkin, introduced as ex-editor of a “leasing trade magazine”, and the whole thing being mainly about the mess left by Elumina Iberica UK, the trading name of, according to Goldberg, disqualified director and now bankrupt Kevin Clarke, whose double Goldberg felt sure he’d seen living in a posh house in Stratford-upon-Avon.
Goldberg started with warm words for leasing, that it could be a useful way to hire equipment, but wondered if the way it works is open to abuse, and when it goes wrong, sometimes leaving lessors with the difficult choice of pursuing debts, or writing them off.
The main focus of the programme was the Shire Leasing / Bank of Scotland golf buggies story. To the average golfer in Warwickshire the Elumina proposition must have seemed made in heaven. The proposition was that golfers could use a buggy, fitted with satnav features, information about pin position, distance to the hole, plus food and drink menus to order sustenance on the course. One golf club owner insisted that golf was not an elite sport by any means, and in addition to wealthy individuals, dustmen and postmen regularly played.
These super buggies didn’t come cheap, but when combined with advertising income the £2600 per month lease rental due to the lessor could netted off against projected (i.e. plucked out of the air?) £2300 advertising revenue, making it almost free. Yes, that’s right, advertisers were going to stump up £2300 per month, per buggy, for years to come, after all the costs of running a continuous advertising sales operation by an outfit called GP Ads.
At this point, Goldberg might have focused on why lessors didn’t question the feasibility of the whole business scheme, but for whatever reason (maybe they didn’t know about it), they didn’t. One may also wonder why the normally pin sharp commercial minds at Shire Leasing didn’t treat the idea with scepticism either.
Anyway, there was then a repeat of Brendan Malkin’s comments spliced in from a previous programme, how he was amazed how much leasing was done on trust and the leasing industry’s high degree of informality.
Goldberg felt that there was a lot of buck passing going on as well. Banks to lessor, lessor and broker to supplier, everyone was saying It’s Not Me Guv’nor.
Julian Rose was then brought in to round off the discussion, and he started by saying, “We are very concerned to hear about the problems you have reported. The behaviour of some equipment sales people is causing problems for customers who then go on to finance assets using leasing. We are striving to work with the Department of Education, on how to get those salesmen under control.”
Goldberg then pointed out that some people who had fallen foul of mis-sold lease agreements were saying that the FLA could not hold its members to account. This was an odd statement, as the FLA’s members hadn’t done anything wrong in this case so shouldn’t need to be held to account, but Rose patiently answered, “ We run a complaints handling service, which is very widely publicised. As it is, we don’t get a great number of complaints, but in the majority of cases we can resolve them amicably. It’s already a very regulated field, with lots of protection for business, and the number of problems is remarkably small relative to the total size of the industry.”
At Leasing World we do think, though, that someone should take a serious look at that clause about the lessor not vouchsafing the cost of the equipment as reasonable. There is the argument that it protects the lessor in some obscure cases, but over the years it’s caused nothing but trouble, e.g. The inflated photocopiers scandal of the 90s, the recent laptops to schools scam, etc. As Goldberg rightfully concluded, “It’s still left some people with a big problem.”
Barclays in fleet expansion deal
Barclays Corporate has extended a £700,000 asset finance and working capital line to GRITIT, a company specialising in winter gritting and snow clearance. The company, which was named recently 37th in The Times Fast Track 100, with an 83 percent increase in sales in 2011, has used the new funding to invest in 30 new vehicles and gritting trailers, bringing its fleet up to 150, located in 92 strategic depots across Scotland, the Midlands, North, South West, South East, and now Northern Ireland as part of the firm’s recent expansion plans.
The business, which was founded in 2004, uses the latest technology to accurately predict the weather, and track its 300 operators in the field. So, when the temperature drops to zero degrees or snow is forecast, the GRITIT team sets to work gritting and manually clearing snow from thousands of hospitals, universities and major corporates, keeping car parks and premises safe, open and businesses operational even during the worst conditions.
Matt Benham, Financial Director at GRITIT, commented on the funding aspects, saying, “In Northern Ireland, where we have just launched, we are investing over £1 million and looking to create more than 80 new employment opportunities in the next few years. We could not do this without the continued support of Barclays.”
After a period of relatively low press profile in asset finance, it is good to hear from Barclays again.
FLA on school leasing investigation
The Finance & Leasing Association (“FLA”) has issued a statement regarding the Radio 5 Live Investigates programme from January 8th, 2012, which investigated cases of schools who feel they have been persuaded to sign highly onerous lease agreements by suppliers who have then folded, but not before such agreements have been refinanced as bona fide with major lessors. The FLA takes the issues raised very seriously, and refers to existing steps taken such as publishing ongoing detailed guidance, maintaining a fraud intelligence system, and working with official educational bodies.
It cautions that schools need to be careful about entering into agreements that sound too good to be true. Further, it counsels that finance companies cannot be expected to simply write off these debts, and has suggested meeting with the Department of Education to discuss ways to protect schools in the future. The text of the statement is as follows:
“Thousands of schools use leasing successfully each year and we believe the number of schools encountering serious problems with their lease agreements is actually very small – a tiny fraction of the UK’s 24,000 schools. As the programme demonstrated, leasing can be a valuable tool for schools when used with proper care.
Nonetheless, we take the issues raised very seriously, and the FLA has taken practical action in three main areas relevant to leasing in schools.
First, FLA members make every effort to ensure that problems are avoided through due diligence and appropriate legal agreements. Our Technology and Business Equipment Group has issued detailed guidance on this, and we are actively looking at whether this should be updated.
Another key tool is our secure fraud intelligence system, which allows FLA members to share information on suspected fraudulent parties who may be posing as equipment distributors. Alerts are typically distributed across the industry within 24 hours.
Second, when problems – however rare – do occur with vendors, FLA members are expected to deal with the consequences reasonably, in light of the customer’s circumstances. While this may involve a review of the debt, finance companies cannot be expected simply to write off the amount owed for an agreement freely entered into with the equipment supplier. FLA members take their responsibilities very seriously, but these do not include responsibility for judgements made by schools about the equipment they need or their arrangements with equipment providers. As the Radio 5 programme made clear, schools need to be careful about entering into agreements that sound too good to be true.
Third, we are therefore helping schools make better procurement decisions. We have worked with the Department for Education and the National Association of Schools Business Managers to develop new guidance to help schools make successful use of leasing. The guidance is couched in very direct language and has just been distributed to thousands of schools.
We are keen to go further. We have suggested . .
read more...Tens of schools lease-scammed 9th January 2012
Top of my mind 9th January 2012
2012 Accentuating the positive 6th January 2012
FHBR climbing 1st January 2012
Econocom deal helps schools and the industry 6th December 2011
DLL’s clipper in top two
De Lage Landen has scored its best result of the Clipper 11-12 Round the World Yacht Race so far, finishing Leg 4 from Cape Town to Geraldton, Western Australia, in second place after crossing the finish line at 1405 local time (0605 UTC) Monday, travelling in an easterly breeze of more than 11 knots towards the Geraldton shoreline.
Skipper, Stuart Jackson, said, “It’s fantastic to finally get in to Geraldton, they’ve given us a really warm welcome and it’s been quite a leg. There have been lots of ups and downs – we’ve been through some great storms and been sitting in no wind as well, which is fairly unprecedented for the Southern Ocean but we’re all here and in one piece.”
Paying tribute to his team, the Southampton, UK, based yachtsman said, “We’re really pleased with our last two results: a third on the last leg and then coming in second here has just been fantastic and it’s giving the crew a lot more belief about themselves as well. They’re working brilliantly as a team and I’m incredibly proud of them.”
Anna Back from Stockholm in Sweden joined the yacht in Cape Town for the race across the Southern Ocean . .
read more...Eurozone down, Index up
The latest Leaseurope Index, which tracks key performance indicators of a sample of European lessors on a quarterly basis, shows a positive picture. Quarter 3 (“Q3”) 2011 is the third edition of this survey. The results of Q3 2011 showed a continuous improvement in the vast majority of key indicators compared to Q2 2011. That is an interesting result when many European banks, several eurozone countries, and the Euro currency itself have been taking a terrible hammering from the markets, how is it that leasing improves? Well, the first thing is that there is a time shift at play here, the Index consists of accounting metrics, and only up to the end of September, while the more gruesome eurozone events have happened since that time. There is an element of taking comfort from the calm scene in the rear-view mirror while driving straight into a pile-up. Does that mean necessarily that the Index in the next quarter, quarter four, will show a decline? Hard to answer Yes or No, so it must be a Maybe.
John Howland-Jackson, Global Head of Leasing & Factoring at ING, puts his finger on it when he says, “It is now well known that economic recovery in the EU is constrained by a high degree of uncertainty. This is expected to act as a drag on firms’ investment decisions, who may very well adopt a wait-and-see attitude.” His prescription is for lessors to continue to cut costs, so the hidden KPI for leasing unemployment figures looks set for an increase. He also pinpoints the need to stimulate demand, calling for more effort to drive demand for leasing’s products and services, and innovation in rethinking existing business and distribution models.
read more...New evidence helps SME leasing 30th November 2011
GE launches SME factoring in Poland 23rd November 2011
Is Europe as confident as US? 22nd November 2011
The Leaseurope Breakout Sessions 6th November 2011
Q. New ED will be
Vendor & Captives
Vendor business helps CIT Bank 22nd November 2011
DLL partners CNH Capital in Russia 12th October 2011
Ritchie Bros MD gives equipment market review 5th October 2011
New CIT President to oversee vendor finance 12th August 2011
Lenovo and CIT gear up on leasing 25th May 2011
Double-digit yields at CIT Vendor Finance 27th April 2011
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