Non-bank lending

Non-bank lenders are revolutionizing the financial services sector by offering innovative and flexible financing solutions to both consumers and SMEs. Their ability to cater to niche markets and provide tailored products makes them an invaluable part of the financial ecosystem. Despite facing challenges such as regulatory compliance and economic pressures, non-bank lenders have significant opportunities to innovate and expand their services. By leveraging technology and participating in government schemes, they can continue to play a crucial role in the financial ecosystem.

Simplifying the complex

Our Non-Bank Lending team acts for some of the largest and fastest growing lenders in the UK and Europe – from those offering secured asset-backed lending to short term consumer credit firms offering loans through an online platform.

We draw on our industry knowledge to inform every aspect of working with you, including an audit that focusses on understanding and harnessing your IT systems, and providing guidance on authorisation and ongoing regulatory compliance.

Financial reporting 

Financial reporting and accounting for lenders can be complex. IFRS 9 is now well established for international reporters but continues to evolve and the increased expectation around disclosures and providing relevant information continues to be challenging for all lenders. We provide support and guidance on accounting for credit loss provisions under IFRS 9 (expected loss model) and UK GAAP (incurred loss model). The use of special purpose vehicles under IFRS 10 also requires careful consideration.

We spend time to understand the impact of these and other accounting standards on your business, and ensure your financial reporting reflects this.

Credit loss provisions

In advising on accounting for loan provisions, we draw on our knowledge of loss provisioning under IFRS 9, and UK GAAP and the relevant component inputs of probability of default, exposure at default, loss given default as well as the role of forward looking macro-economic factors where applicable.

Our team will spend time with you to understand how the provision calculation works for your business and evaluate how it complies with IFRS or UK GAAP.

Funding structures

The ability of non-bank lenders to grow depends on the availability of funding for lending. Unlike banks, lenders may not have the capital base to fund ambitious growth so need to look for alternative financing options such as warehouse finance or forward flow arrangements, whereby new loans are sold immediately to a special purpose vehicle (SPV) financed by third party investors.

We will guide you through the complexity of accounting for these arrangements – such as IFRS 10 and the need to consolidate SPVs, as well as IFRS 9 and the requirement to recognise/derecognise loans in the balance sheet – and the consequent impact that this may have on revenue recognition.