Commercial and even mortgage
brokers are getting in on the motor finance action, writes Fred
Crawley.
Go deeper with GlobalData
UK business finance brokers of all
kinds are dipping their toes into motor finance, as business
remains tough in their own sectors.
In its latest annual survey, the
National Association of Commercial Finance Brokers (NACFB) has seen
a significant rise in the amount of motor finance business
introduced by its members, from £759m in the year leading to July
2009 to £980m in the following year.
By comparison, broker-introduced
asset finance volumes have decayed over the past year, despite a
general recovery in the market. The association found that £992m
worth of asset finance business was introduced by member brokers in
the year ending 30 June 2010, compared to £997m in the previous 12
months. This compares to £1.2bn introduced at the peak of the
market in 2006-07.
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By GlobalData
A large part of the 29% revival in
motor volumes seems to be down to members without a motor
specialism – such as asset finance brokers – diversifying their
sources of income by taking on motor business.
Commenting on the increase, NACFB
chief executive Adam Tyler said “this is partly due to the fact
that more of our members are now writing this kind of
business”.
Even commercial mortgage brokers
are beginning to get in on the action, with 6% of the association’s
358 mortgage introducers having conducted motor deals in the last
12 months.
One question that remains
unanswered is what kind of motor finance business is being written
by NACFB members; the statistics do not break down the total volume
into consumer and fleet business.
Certainly, while the NACFB is aimed
at providers of finance to business, many of its vehicle finance
members provide finance to consumers as well, especially when the
bulk of their commercial work involves smaller SMEs.
Veteran vehicle finance broker and
former NACFB president Graham Hill says that the ongoing prevalence
of “grey fleets” has contributed to a “continued shift towards
retail” in NACFB member business volumes.
This has happened as fleet
specialist brokers’ SME clients have sought to obtain employee’s
vehicles outside of the business, thus creating an opportunity to
broker a consumer finance deal within a B2B relationship.
However, the move to consumer
business from a commercial finance background entails a much
greater level of engagement with regulation and legislation, and
has no major precedent in the history of the NACFB.
As such, there is a question mark
hovering over the consumer business being explored by NACFB brokers
with a B2B background.
At the same time, established
retail motor finance brokers are calling for their own trade body
to represent them (see Brokers back plans for new trade
association), as they feel they need differentiation from
fleet introducers.
While adaptability and opportunism have become vital
characteristics for brokers of any sort over the last three years,
it seems diversification may be leading the sector into something
of a crisis of identity.
