Leasing companies should not be regulated like big banks
The Federal Association of German Leasing Companies (BDL) is advocating for a regulatory approach that better differentiates between the entities affected by its requirements. „Leasing companies should be regulated differently than big banks“, says BDL President Kai Ostermann in an interview with Börsen-Zeitung.
He criticises the fact that EU regulations, which also apply to leasing companies, are often designed with international finance firms as the primary target. „But leasing firms are not big banks."
The idea that the principle of proportionality will solve everything does not work, Ostermann, who is also the CEO of Deutsche Leasing, argues. In his view, regulatory developments instead lead to increasingly tight regulations, with one amendment following another.
Call for a national regulatory framework
„The framework does not fit“, emphasises Ostermann. „Leasing needs its own national regulatory framework, one that aligns with Germany’s SME-driven structure“, he adds. BDL represents around 230 member companies, with 75% of them employing fewer than 50 people.
The regulation of leasing companies in Europe varies significantly. In the UK and Austria, leasing is entirely unregulated. In Germany, however, the industry is subject to „strict bank-like regulation.“ The legal and tax frameworks also differ greatly from country to country. „That’s why we advocate for keeping leasing companies under national supervision“, he explains – partly to account for the highly diverse market structures. In France, for instance, there are a small number of large leasing companies left, most of which are subsidiaries of banks. Unlike in Germany, France lacks a broad-based SME sector and consists mainly of large corporations and very small businesses.
German mid-sized leasing firms cannot sustain regulatory oversight similar to that in France. „If German leasing companies need five employees just to ensure compliance with regulatory requirements, it simply won’t work“, stresses Ostermann.
He is particularly critical of the expansion of reporting obligations. The depth of data required, especially for sustainability reporting, has become a major issue. „It has taken on a life of its own and now far exceeds what is reasonable," he says.
In some cases, sustainability reports stretch over several hundred pages. „I wonder who is even supposed to read all of that“, remarks Ostermann.
Scepticism over harmonisation of insolvency law
Gold-plating – where national lawmakers add extra layers of regulation beyond EU requirements – is another serious issue, warns Ostermann. „National legislators expand the requirements, then auditors add another layer. Brussels must take this into account.“
He is also sceptical about the push for harmonising insolvency laws within the EU, an idea frequently discussed in the context of the Capital Markets Union. „Given the differences in insolvency rules, we are critical of the idea because there is a risk that European regulations could become overly debtor-friendly", he says. He cites moratoriums and the pre-insolvency schedule as examples, warning that these could lead to an increased regulatory burden.
Ostermann acknowledges that the fight against money laundering is important for the BDL, but adds that anti-money laundering regulations must not go overboard. So far no one has convincingly explained why leasing companies in particular pose a heightened risk. „From a criminal’s perspective, there are certainly more promising ways to launder money“, he points out.
Leasing of used cars
Ostermann’s association is closely monitoring discussions surrounding leasing and used cars, as outlined in the EU Commission’s latest action plan for the automotive sector. Many larger leasing companies have dedicated divisions for reselling thousands of used vehicles, and this is a significant part of the leasing value chain. Leasing of used vehicles is gaining importance, particularly with the rise of electric mobility. The concept of usage is becoming even more central, meaning leasing is no longer limited to the first cycle of a new car purchase. New subscription models are also emerging. „The market share is still small, but it will grow", he says.
