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Over the past decade, there has been a significant shift in patterns of consumer behaviour in relation to purchasing of new cars. UK private car registrations were 39% higher in 2016 than they were in 2011, a trend which has in part been driven by the expansion of the Personal Contract Purchase (PCP) deals. Some 82% of private new car purchases was financed in this way in 2016. PCPs contribution to the rise in unsecured borrowing is firmly on the radar of both the Bank of England (BoE) and Financial Conduct Authority (FCA).
Worries about the level of debt in the UK household sector have re-emerged over the last year. The period of – rather modest – retrenchment that took place during and since the global financial crisis saw debt fall from a peak of 163% of income to 141%.
On the 31st October 2016 the consultation period closed on new proposals by the Prudential Regulatory Authority (PRA), which are highly likely to alter the internal ratings based (IRB) approach that deposit institutions (banks and building societies) with residential mortgage lending portfolios will need to adopt when calculating their risk-weighted assets (RWA).
The final March budget didn’t spring any surprises. While the Chancellor presented a more optimistic picture for short-term growth, predications from the Office for Budget Responsibility’s (OBR) forecasts indicate that the improvement will likely not last long.
IFRS 9 (the new accounting standard) is fast approaching with many organisations already in full swing in terms of development and with their chasing pack firmly in the planning stages for design and build. But just how ready are you for the impending changes?
IFRS 9 is the new accounting standard from the International Accounting Standards Board for credit losses on portfolios of loans. It will come into effect in most jurisdictions for reporting periods starting January 2018. One of the key principles is that lenders should use relevant data that is reasonably available to assess the appropriateness of credit provisions.
IFRS9 is the new accounting standard from the IASB for credit losses on portfolios of loans that is expected to come into effect in January 2018 across at least 96 of 174 jurisdictions around the globe. Work in many banks and lenders is well progressed towards meeting the reporting deadline. I will not repeat the considerations required in the building of a new provision process here as that has been well covered in many places previously.
Finance services regulation is difficult to get right – knee jerk reactions often lead to unintended consequences and potentially the roots of the next bubble or crisis.