Since last we covered the topic, we have been busy spreading the word about the APR4SMEs campaign.
Growth Street CEO James Sherwin Smith has been corresponding with Jeff Longhurst, CEO of ABFA outlining the arguments for an APR for SME. After initially agreeing with the merit of more disclosure in commercial finance, James received a vague response, supported by ‘facts’ with no substance.
Mr. Longhurst cited the ‘impossibility’ of publishing an APR for asset based finance products and hid behind legal semantics. His concern that publishing an APR will harm asset based finance providers, because customer consideration will be based on price, not services, is wholly untrue. Lenders should be easily comparable on price and service, which is the exact use case for APR. It creates a fair and competitive market for borrowers, which these services were created for.
ABFA has continued to push the argument, during an exchange with Brian Moore, spokesman for the RABF (Regulation for the Asset Based Finance Industry), in the comments on an AltFi article regarding the lack of transparency in the alternative finance sector.
Mr. Moore made some excellent points in his rebuttal to comments made in the article by Mr. Longhurst, stating that many of ABFA’s own members have committed fraudulent claims in an effort to gain customers, which has been exposed in several national papers including The Telegraph, The Financial Times and The Times.
Mr Longhurst responded with the same tired argument concerning the legalities of APR. We hope that Mr Longhurst realises that the APR4SMEs campaign is for complete transparency, the same thing he claims to desire. At the same time, however, he is defending the unscrupulous actions of his members by not requiring them to demonstrate the true cost of finance in a competitive and growing market.
Continuing the fight, Growth Street has given our support to the Access to Finance Enquiry and is ready to give evidence when called upon. What the Access to Finance committee hopes to ascertain is whether growing businesses have adequate access to finance. This includes discovering any weaknesses and strengths within the government's attempts, since the financial crash in 2008, to create more options for business financing and growth.
What we hope to achieve by giving oral evidence, is to move the APR4SMEs campaign to the front of the agenda, as the committee discusses regulation of alternative methods of finance for businesses.
Since we began this campaign we have increasingly had exposure from both national and local media. We continue to speak with MPs and committee members, and James and Greg Carter (Growth Street founder and CRO) have personally visited Number 10 to speak with Chris Hopkins (Prime Minister’s Business Relations Advisor) and Tom Nixon (leader of the Financial Services Policy Issues.)
We encourage everyone to read James’ full letter to Mr. Longhurst, rebutting the ABFA argument with 22(!!!) counter points, which can be found here.