The amount of new business conducted in the consumer finance space grew by 16% in December 2021, compared with the same month in 2020.

According to the Finance & Leasing Association (FLA), the value of new business totalled £8.7bn in the final month of 2021.

New figures published by the FLA revealed that last year as a whole saw new business levels grow by 15% compared with 2020. However, 2021 still remained 4% lower than 2019.

The FLA’s members in the consumer finance sector include banks, credit card providers, store card providers, second charge mortgage lenders and personal loan and instalment credit providers, as well as motor finance providers.

Figures showed that the credit card and personal loan sectors together reported new business up by 23% in December compared with the same month in 2020, and 17% growth in 2021 overall. The retail store and online credit sector reported a fall in new business of 1% in December in comparison with December 2020, but grew by 6% in 2021 overall.

FLA director of research and chief economist, Geraldine Kilkelly, commented: “FLA’s consumer finance markets made a strong recovery during 2021, with new business only 4% below pre-pandemic levels by the end of the year. 

“Economic and market conditions will remain challenging this year, with many households facing a significant squeeze on disposable incomes from higher inflation, interest rates and taxes. FLA’s Q1 2022 industry outlook survey showed that almost two-thirds of consumer finance providers expect new business growth over the next twelve months, but more than a fifth expect some contraction in new business.”

In the second charge mortgage space, the FLA also reported a total £99m of new business in December 2021, a figure up by 53% on the same month a year earlier.

Commenting on the second charge mortgage market figures, director of consumer and mortgage finance and inclusion, Fiona Hoyle, said: “The second charge mortgage market has reported a sustained recovery in new business volumes since April 2021. There is still room for growth as new business remains 16% lower by value and 14% lower by volume than in 2019.”

Across the entire consumer finance markets that the FLA provides data for, the association also revealed that the sector had provided £132bn of new business in 2021 to grow by 15% on 2020.

Of this total, £20bn went to SMEs while £47bn was provided by non-bank lenders.

FLA director general, Stephen Haddrill, added: “As the UK economy moves on from the pandemic, FLA members will play an integral role in building a more sustainable future, including helping many SMEs transition to net zero.

“Our proposals for a green finance wholesale guarantee would help to scale up the availability of green lending, while the sharing of risk between lenders and government would keep prices competitive for the end customer.

“The significant contribution of non-bank lenders is also clear from our latest figures. Our proposal for an independent liquidity funding scheme for independent business and consumer lenders would ensure that during times of stress on wholesale markets funding would continue to flow to all corners of the economy.”

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