At the end of 2011, following years of planning, FGA Capital, Fiat’s captive finance provider, began taking care of its own administration, replacing Santander Consumer Finance. FGA credit risk director Jon Tilney and retail operations director Simon Young told Richard Brown how the move has brought the company closer to the market.

FGA Capital went live with its new in-house administration on 7 December. The captive, launched in 2006 by Fiat Group Automobiles and Crédit Agricole, now administers its own underwriting, collections, processing and customer contact at its retail service centre in Slough.

This was a massive move, as Jon Tilney points out by explaining the previous set-up: "It was FGA Capital’s money and, generally, it was our policy, but it was all their staff.

"The finance deal was underwritten by a Santander underwriter; it was paid out by Santander. If dealers had queries, Santander would answer the phone.

"Any customer queries went to Santander complaints or collections. But all would be answered as FGA Capital. Phoning up, you wouldn’t know any difference."

The change has been assessed over time leading to formal notice being given to Santander in 2009, although Tilney emphasises the good management provided by the Spanish-owned bank, which will continue to administer the company’s old book, now in run-off mode.

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"It was right for the business," he says. "It fell in line with the global or the European strategy of Fiat and FGA Capital. It was the right time with the resurgence of Fiat in the UK.

"We began building the project team in January 2011 and the operations team is now handling finance for the Alfa Romeo, Abarth, Chrysler, Fiat, Jeep, Jaguar and Land Rover marques and, since 7 December, taking care of its own retail business."

That team includes 12 payout staff and 16 customer service employees under Young, while Tilney takes charge of a core of six underwriters (plus other staff trained in underwriting) and a collections team of six, growing to 16 by the end of the year.

"We see both the dealer and the customers as a customer of ours and therefore want to give them equal priority," explains Young. "The activity over the next few months will start to reduce from a dealer perspective as the customer book grows."

As Tilney acknowledges, managing such increased business across a smaller operation requires multi-skilled personnel: "That is clearly one of the challenges when you’re setting up a business like this; you need the right staff levels and we are going through a programme of cross-training."

For both men, any transitional pain is mitigated by the long-term benefits.

"We have had some teething problems, but these are low-level problems and ones we fully expected to arise," says Young.

"Deals are coming in and going on the system, customers are getting their welcome letters, and dealers are being paid their commission – which are the main things.

"We’ve got some very strong campaigns in the dealer networks at the moment," he adds, saying Tilney’s underwriters are now working "pretty well flat-out all the time".

In particular, the new capabilities of FGA Capital in relation to its outlet network are a resounding positive for Tilney.

"Having outsourced before, although Santander do a great job with us, it just felt we were slightly removed from the business. To get that much closer to it has been one of the major benefits," he says.

For Young, the move allows FGA Capital "to react quicker to issues and the market, and to be able to have our own priorities".

"I think we can react quicker to customer needs as well," says Tilney. "We have got a clearer line of sight to the business, rather than going through the intermediary."

As a captive partner, FGA Capital will focus on selling new cars, wholesale and retail, and supporting the manufacturers, but maintain a large retail used vehicle book, something the new set up will facilitate.

The two men are happy with prices remaining stable and high in the used market, and now have the direct contact with dealerships to make the most of it.

"What we do have is an appetite for used car business," explains Young.

"That will be out of the dealer network and out of our dealer connections, not through any broker-based introductions."

richard.brown@vrlfinancialnews.com