Why did you decide now was a good time to sell?
Just to clarify, I haven’t sold my entire stake in Frontline, I’ve a sold a portion of it. So I’m left with a minority stake in the business. There is a misconception that I’m now a man of leisure. I wish!
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The reason was, to be completely honest, I’d run the business for 13 years. It was getting to the point where, from a personal perspective, I thought I’d taken it as far as I could. It wasn’t a difficult decision as it was the right thing to do for the business and Martin Hill had already established himself as joint managing director.
Martin joined us two and a half years ago, and has really established himself as an integral part of the team. And in any process, if you’re looking to reposition yourself you’ve got to find a successor. Overall my decision to sell a controlling stake to CV6 involved a number of factors, but the main reason was the fact that the business is now moving to new leadership, and Martin is the right person to do it.
The press release said you were commencing a new role in the business, and also becoming even more involved with the F&I Foundation.
Predominantly, there are four things I’m going to spend my time doing. First, I’m still very much a board member of Frontline. I’m still very much involved in the strategic growth plans of the business.
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By GlobalDataSecondly, my strength has always been in finding new markets and breaking new ground. In particular, I shall be heading our charge into two new sectors: asset finance and leisure.
Next, I shall be looking at overseas market opportunities. This is an area that we’ve not explored in the past, so there have been a couple of potential prospects I’ve been looking at.
Finally, there is my work with the F&I Foundation. So far it’s been an unbelievable success. We’ve helped a young triathlete from a position where she was constrained financially, and now she’s on the shortlist for Olympic selection. We’ve also recently taken on a ten-year-old golfer who we’re sponsoring to go to the World Championship in Florida in August.
The annual F&I Conference and Awards Dinner supports the Foundation and exemplifies this winning spirit. We’ve just announced the date of the 2015 Conference. It’s going to be on 15 October in Leeds. I’m keen to spread the word regarding the good work the Foundation does for our young sportspeople.
When you referred earlier to a ‘handover’, what did you mean?
I started this business in 2003, and a lot of the relationships I’ve built up are very personal. We have an excellent relationship with every single Frontline customer. So I’m making sure that every client or partner understands the business case behind our decision and how it’s of benefit to them as a business. So Martin and I are currently visiting clients. We don’t think its sufficient to just send them a letter or press release.
Is this something that’s been on the cards since Martin joined Frontline, or this a relatively recent decision?
The whole process started about the beginning of last year with Martin Hill being made joint managing director. It was over
a nine to ten-month period where we sat down and really decided what the best strategy was. So it wasn’t a knee-jerk decision.
Two key points for me: this hasn’t been decided overnight, and the business has considered these points very carefully. Also I’m keen to stress that if people think I’m now a man of leisure, which is usually the case when things like this happen, I want them to know that I’m not, and I’m still very much around and involved.
So will there not be much of a sudden transition if it’s been long planned?
The planning has been going on for the best part of a year now. Our clients are at the centre of what we do, and we are absolutely confident that any changes at Frontline will result in an even more improved client relationship. What has built our business over the past 13 years is the fact our clients are more like partners.
So now the announcement has been made. A lot of people have told me that they’re not really surprised, and that they saw this as a logical progression. Those who got the wrong end of the stick about me running off to the hills have been, very politely, put right. It’ll not be long before someone else is the main topic of conversation, so we’ll just carry on doing what we do. We’re enjoying tremendous growth; we’ve had a very good start to the year, we’ve got the F&I Conference to announce – so it’s all good news for Frontline right now.
Can you talk about the new markets?
It’s no secret we’re looking to shake up the asset finance sector. We’ve recently forged new relationships with key lenders and suppliers in this sector. We’re still in a heavy pilot at the moment and will be at the end of April to go to the sider market, we see huge potential here.
Leisure is one sector we’ve had a presence in for the last two or three years with some promising activity. Again that’s something I can now concentrate on as we look to add value to the leisure market.
With regard to the overseas markets, I cannot reveal who (or where) we’re talking to, but we’ve got a system that has global reach. Couple this with the fact that we’ve got an investor who’s focused on sustainable growth and is happy to look at opportunities. I am genuinely excited that this is part of my new remit.
Can you clarify what you mean by leisure?
Leisure would be static caravans, motorhomes, jet skis, motorcycles and so on. It’s mainly static caravans and motorhomes – those are the main areas we’re looking at.
There is a lot of synergy there with what we do already. For example, they’re not immune from the FCA rules on general insurance and consumer credit.
The FCA must have been a bit of a blessing in disguise for Frontline
Frontline is a massive believer in compliance. I think compliance makes people get out of bed a bit earlier and work a bit harder, and it creates huge opportunities.
I do have empathy for many of the dealer groups and brokers out there – for many of them this will be the first time that they have been subjected to a regulated environment. It isn’t surprising that many of them need assistance at every step of the regulatory process – from application through to things like sales practices and systems and controls.
We work with our clients, and our lender partners to make sure that our systems and services reflect the way that the regulatory environment will evolve. And it will evolve – even though the final rules for consumer credit have been out for a year now, we still don’t exactly know the approach the FCA will be using for enforcement. The one thing that is undoubted, however, is that dealers and brokers should be taking this very seriously indeed and focusing on their responsibilities to create positive customer outcomes from their F&I activity.
We make a genuine offer to all of our clients and partners – if they have any thoughts on how they should approach regulation we’re more than happy to act as a sounding board for their suggestions. I’m pleased to say that many of our clients take us up on this offer on a regular basis. Also, in the past 12 months Martin and I have spent a lot of time with lenders looking at compliance strategies. So for the past year to 18 months, this has been a big part of what we’ve been doing.
And I guess this will continue for a while
It will, but I think a lot of people are saying "we know what we’ve got to do now, let’s bring it on and get on with it". Those businesses that have an open and transparent policy towards the FCA are going to be fine in my opinion.
So the future is going to be interesting while the final rounds of regulatory applications are put in. Most motor dealers have gone for the ‘limited permissions’ regime, where there’s a lesser level of regulation and there’s also less information to provide at application stage. Dealers should however beware of simply ticking the boxes on the application today, that they have suitable systems and controls in place, if they don’t actually have those systems and controls. It is so easy to be caught out.
Anything you want to talk about for the conference?
We started the conference five years ago because we felt there was a need for F&I having its own identity and presence within our industry. We’re expecting to have 750 delegates descend on the Royal Armouries in Leeds on 25 October.
All of the proceeds of the conference go to the Foundation.
We started the Foundation just under a year ago. We worked with a young triathlete who was struggling financially. She needed some cash to help her get to venues. We got her onto the European Tour last year. She did extremely well and made the World Series selection in December, which puts her in with a chance of getting to Rio in 2016. She’s now receiving lottery funding, so in that respect our job with her is done.
Now we have a young lad called Joe Sykes. He’s ten years old, and has been playing off scratch since he was six. His dad got him into the World Under-14 Championship in Florida, and we’re paying his air fare and entrance fee.
I suppose seeing how quickly the industry is growing, this is the time to be pumping money into a business?
Without a doubt. Motor finance is an area of huge interest for external investors. That much is loud and clear. There’s never been a better time to be dealing cars on finance. There are so many options available. Certainly, compared to when I was sitting in the chair 15 years ago, the opportunities to sell cars and assets are better than ever. You’ve got every possible finance product, and the big lenders are being very supportive as well.
The key thing is everybody is happy about the investment. Frontline is in tremendous shape. It’s a business I’m immensely proud of, and nobody can ever take that away from me.
