Last week in
the offices of a UK motor lender, a conversation about the history
of the company took a tangent when a staff member’s two-year-old
child wandered through the room.
“We start them early here,” joked the
managing director, before going on to explain that there was
perhaps a little more to his remark than you might expect.
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“His mum works in collections and his
dad’s on the underwriting desk… there’s a good chance that kid is
going to end up in car finance,” the MD reflected.
Well might he know – the director in
question represents the third generation of his family to work in
the asset finance industry, and has been in the motor finance
business since his first day of work.
He is not alone in being so deeply
rooted in the field – most of the industry’s leading figures have
grown up in the market, and the sectoral
experience of directorial boards is commonly measured in
centuries.
As a result, the motor finance
business has developed a more distinct character and culture than
perhaps any other part of the financial services world, since those
who wrote its rules in decades past are still at their posts
today.
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By GlobalDataThis insular culture has its
advantages.
The majority of company leaders have
memories of early days doing field sales or going out on
collections visits, and those experiences feed directly into the
way they run their companies and develop the careers of their
employees.
They also have repeat experience of
recessions, residual value fluctuations, attempts by the industry
to promote certain products or processes, and countless other
issues.
This depth of knowledge is great news
when it comes to stability, but has the potential to slow down
innovation – companies can be wary of embracing new products and
practices due to a memory of their previous incarnations having
flopped.
Unfortunately, 2011 looks like a year
where new things will have to be attempted in order to guarantee
real success.
New ways of
thinking
2010 presented a relatively benign
trading environment in terms of margins and defaults, but uncertain
economic times ahead (and yes, no opinion column would be complete
without raising the spectre of “looming public sector cuts”), will
really intensify the demand for new ways of thinking.
The new CCD regulation set is the most
obvious example of a trigger for innovation – while lenders have
made a sterling effort to ready their systems well in advance of
the 1 February changeover, they will also have to be prepared for a
genuine sea change in the way that finance is sold.
Dealers are already learning this
lesson – many who have relentlessly pushed customers towards
five-year hire purchase deals for the sake of commissions are now
taking into account both the new regulatory obsession with product
suitability and the importance of customer retention, and embracing
PCP with open arms.
As discussion on the Motor
Finance LinkedIn group seems to have demonstrated, 2011 looks
like it could be PCP’s time to shine – but the product will need
greater commitment from more independent lenders, more legal
understanding from retailers, and expert management of GFVs to
avoid negative equity and disillusionment from customers.
In the meantime, while the industry
moves into new territory, this could be a really good time to think
about recruitment strategy. Maybe presenting toddlers with “my
first set of underwriting criteria” might be beyond the pale, but
there is certainly a case for looking at where the next generation
of expertise is going to come from.
Motor Finance’s sister title,
Leasing Life, will examine this idea in a special
supplement in February, where it will profile 30 of the asset
finance industry’s rising stars.
It will also host its Future Leaders
in Leasing webinar in March, with a discussion of what makes a
leader, and what employers and recruiters are looking for from
up-and-coming leasing professionals. Look our on
www.leasinglife.com for details on how to sign up.
Wishing you a very happy New Year, and
a smooth start to the new era of CCD compliance.
Fred Crawley
fred.crawley@vrlfinancialnews.com
