Well known industry figure Roger Gewolb, formerly of
Park Motor Finance, has announced a raft of new projects to
Motor Finance, including political work to reform the UK
subprime credit market.
Following previous advisory assignments for
the Bank of England and the Treasury, Gewolb says he is working
with parliamentarians to develop new finance and business
initiatives, with what he calls “a bit of a social enterprise
twist”, with a view to reforming UK subprime credit.
In terms of his ambitions in the motor finance
market itself, the Chicago native told Motor Finance that
potential investors he had met with were either hampered by
unrealistic profit and timescale expectations, or unnecessarily
worried about subprime business.
“There’s still a lot of unjustified fear
attached to the subprime word due to the mortgage industry,” he
speculated. “UK subprime car finance is the baby that shouldn’t
have been thrown out with the mortgage bathwater.
“Of the few businesses that do still reach
into subprime, most appear to be performing well; even the running
down portfolios of the many players which had their funding
curtailed seem to be performing well.”
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By GlobalDataGewolb is particularly concerned that old and
new subprime customers may be driven to extremely high interest
payday and internet loan providers while the gap in the market
persists.
“There is still no clear solution to the
extreme exploitation of the financial underclass by lenders
charging rates in the 1000s of percent”, he said. “More and more
borrowers fall off this cliff, into the arms of finance they can
possibly never repay, with almost all of the finance companies that
could help being still cut off from funding.
“I mentioned all of this to one earnest and
concerned parliamentarian, who reassured me, based on what the
short term loan providers had come to tell him, that this lending
comprised terms so short as to make light of the punitive interest
rates involved. I asked him what rollover rates the lenders he had
spoken to were running, and he stopped dead in his tracks: ‘what’s
a rollover rate?’ he asked.”
A full interview with Roger Gewolb will be
published in
March’s issue of
Motor Finance
magazine.
fred.crawley@vrlfinancialnews.com
