A working group of banks that includes HSBC, Barclays and Lloyds said in a consultation paper there are too many trade groups, leading to duplication of lobbying and a lack of strategic direction.
Most financial rules in Britain are set by the European Union and the paper said several UK trade associations actively lobby policymakers in Brussels on similar issues.
"Many trade associations acknowledge that this lack of coordination undermines the strength of UK industry representation in Brussels," the paper said.
UK banks, which pay the bulk of membership fees for the nine trade associations now under scrutiny, want to trim costs wherever they can as they comply with more burdensome regulation aimed at avoiding a repeat of the 2007-09 financial crisis.
Imperative for change
The paper suggests that a single, federated trade association comprising an overall coordinating council would go a long way to effectively address current challenges. It could also help the industry rebuild trust amongst its customers.
The consultation paper sets out an "imperative for change", making it clear the banks have little interest in two other options, namely improving coordination and merging bodies representing similar products like home loans or cards.
There are over 30 trade associations in the fragmented landscape, with nine of "direct relevance" to the consultation which ends in April with a final recommendation due in May.
A spokesman from the Finance & Leasing Association (FLA) told Asset Finance International: "Organizations like the FLA exist to represent specific markets whose voices would be at risk of not being heard in a larger organisation. Those markets extend well beyond the big banks, hence the FLA’s diverse membership, over 60% of which are not banks.
"While it must always sensible to minimise overlaps and maximise cooperation among trade bodies, setting up a new, single, over-arching organization could be a very expensive and time-consuming way of addressing such issues."
Julian Rose said: “Trade association merger proposals have come and gone before, but this initiative does seem to have some strong backing at the top of the banks.
“Whilst the case for change can be debated, such a merger seems bound to give the large banks more control of how the sector is represented. In the United States, the National Equipment Finance Association (NEFA) serves “value conscious” small- to mid-size independent equipment finance companies, both lessors and brokers together with service providers.”
He added: “If the proposed consolidation was to go ahead, a need could emerge for a UK equivalent of NEFA for the asset and asset-based lending sectors.”
Julian Rose is the founder of Asset Finance Policy Ltd, previously he was Head of Asset Finance at the UK Finance & Leasing Association. www.assetfinancepolicy.co.uk