Lombard Vehicle Management has stopped
transacting new business through brokers and intermediaries, the
RBS-owned fleet management and leasing company announced.
Go deeper with GlobalData
“Today we have announced that we are exiting from
the introducer market in the UK for both our Lombard Business
Finance and Lombard Vehicle Management businesses,” the bank-owned
lessor said in a statement.
“[Dealing directly with customers] will mean our
relationship managers in these units will spend more time directly
with customers understanding and supporting their requirements and
offers businesses the opportunity to deal directly with ourselves
rather than through a third party.”
Lombard said that ever-closer ties with the bank’s
business, commercial and corporate channels would help it source
new business for its fleet and asset finance businesses.
“This change to our operating structure will also
help us credit manage our book more effectively by dealing directly
with the customer from the outset of a proposition,” it added.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataUp to 85 staff across both departments may lose
their jobs as a result of the decision, although the lessor
stressed that it intends to “ensure that the number of compulsory
redundancies is kept to an absolute minimum”, promising staff its
“full support”.
A Lombard spokesman promised that all existing
agreements would be honoured, and emphasised that Lombard is still
fully committed to the fleet and asset finance markets, with the
distribution model the only aspect of its business that is
changing. He added that the lessor is working closely with banking
colleagues to grow its new business in the SME market.
The decision will hit brokers hard – but is not
entirely unexpected, said chief executive of the NACFB, Adam Tyler,
who commented: “The withdrawal of Lombard from both the asset
finance and vehicle finance broker market doesn’t really come as
any great surprise given that the strategy of Lombard’s parent,
RBS, has been to retreat and concentrate on its own customer
base.
“However, there is no doubt that this is a blow for
many and particularly for some vehicle brokers, could be the final
straw in some cases. Lombard had largely withdrawn from the asset
finance introducer market earlier this year when it controversially
‘culled’ a number of introducers from its panel. Because of this,
the impact of its total withdrawal will have been lessened as many
brokers had their lines cut some months ago and had sourced other
funding lines,” Tyler said.
Lombard Vehicle Management won the association’s
“Vehicle finance provider of the year” award at its 2008 gala
dinner, the third win in four years for the lessor.
Tyler added: “It’s a sad indication of the state of
the market that one of the biggest lessors for brokers has had to
close its doors [to introducers].”
See Testing times for
brokers for more on LVM
ANDY BELL: A broker’s view
It’s always sad to hear of any
business closing, however, it hits harder when it involves people
that you have worked with for many years.
Speaking to several brokers, opinions
varied as to the effect that LVM’s demise will have on brokers.
After many conversations, the consensus seemed to be that LVM was
not the most efficient funder; with processing times for a deal
from underwriting to dealer payout being far slower than
average.
Indeed, in some cases brokers reported that
they had dealers who simply refused to supply if Lombard were
funding the deal.
But, in many cases their rates were
considerably lower than average and their commissions considerably
higher. In a marketplace as competitive as vehicle leasing, if your
competition was using LVM, you had to use LVM too, to compete. Now,
with LVM gone, Adam Smith’s invisible hand will ensure all funders
will get a more equal share of the business.
The author is NACFB director
of vehicle finance, and director of First Vehicle
Leasing
