There were determined messages among the smiles and congratulations at Frontline Solutions’ third annual F&I Conference and Awards Dinner. Richard Brown and Fred Crawley spent the day elbow-to-elbow with brokers, lenders and dealers at Harben House, Newport Pagnell.
The overarching message at Frontline Solutions’ third annual F&I Conference and Awards Dinner was one of market unity, despite rivalry or business diffe, and was carried all the way to the small hours following a dinner and awards ceremony that raised £11,085 for nominated charity Childflight and commended the best work in car finance of the past 12 months.
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The tenor of the event was set by Andy Shuter, managing director of Frontline Solutions, who, in his opening address reminded attendees that the event was about both the “community spirit in our industry” and “the issues that affect us all”.
Threats to brokers
The stirring performance of the day came from Richard Hoggart, managing director of DSG Financial Services, who warned delegates he would air “some intense beliefs” in addressing the future of brokers.
The inflation of market competition, said Hoggart, meant brokers should have already prepared to deal with the threats of the future, although “not everyone will be a part of it”. The uncertainties since 2008 meant brokers no longer controlled a market which could survive without them, and left intermediaries either relying on the internet for leads or, for those already able to prosper through dealer leads, facing new and “underestimated” challenges.
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By GlobalDataHoggart added that commission disclosure “could be a good thing”, but expressed frustration that legislation was needed as acatalyst to end market suspicion surrounding broker practices, the “embarrassing corruption” in the industry, and “illicit transactions between dinosaurs”.
He plainly called the making of any decision based on personal reward “bribery” and cast dealer employees receiving favours without sanction from their management as “criminal” behaviour.
Instead, brokers could protect against bad practice or hints of bribery by declaring commission, redesigning their work with dealers and having funders institute clauses with brokers. Such behaviour would secure income streams better than a transaction model and facilitate a greater understanding of products. At the same time, brokers merely ticking the boxes of compliance were only “storing up trouble for the future” and risked further exploitation by claims management companies (CMCs).
By doing all this, intermediaries would also be compelled to demonstrate their competence to funders and dealers, often via technology, and improve customer prospects while jettisoning “old relationships and old habits” to ensure the right deal is presented to customers before they leave a showroom. Decisions, said Hoggart, should be faster, better and based in logic, not reciprocity, while bureaux should be given reason to trust transaction creators with credit data.
“We should push up standards,” said Hoggart. “Beat the contempt.”
The new broker ideal, said Hoggart, was to be “motivated” and “ethical and transparent” partners, and built on a “core of point of sale finance” of brokers using their “entrepreneurial heart”. Hoggart also pointed out the lack of finance industry-specific support of automotive charity BEN and discussions are now under way to establish an event in 2013.
Wolf in sheep’s clothing
Given his work as legal director advising on whether debtors have been victims of malpractice, Mark Hollinshead, director of Equity In Finance, was welcomed as a source of advice by delegates defending themselves among the PPI frenzy.
“Not everybody’s out to get you,” said Hollinshead and reminded the audience that the Financial Ombudsman Service (FOS) was comprised of solicitors able to comprehend the laws that governed consumer credit and disputes and understand the benefits of PPI as a protection against default.
Hollinshead also advised companies to raise the issue of hindsight with claims and use DISP rule 3.7 (and its amendment under the FSA in 2010), which would allow for assessment of whether a client would have bought PPI, regardless, and to look at the appropriateness of a lump sum premium.
There was, however, “no final view on timescales”. Customers were permitted to complain at any point within six years of purchasing a policy. Given that selling of PPI ended in 2008, it could be expected to end by 2014. However, the three-year rule – that claims could be raised within three years of being made aware of the possibility of doing so – raised the question: At what point was everybody aware of PPI?
For Hollinshead, the three-year countdown started in April 2011 with the judicial review brought by banks regarding the FSA and PPI, again giving a date of 2014.
Regarding data protection, Hollinshead advised attendees to “kick back” any claim containing erroneous or incomplete data. The eight-week window to deal with a claim would not begin until that claim was verified and accepted.
Hollinshead reminded attendees CMCs were not solicitors but “marketing companies” for whom “PPI is the perfect product” and “regulators have given it to them on a plate”.
By comparison, on commissions, Hollinshead advised not to “over-worry… but get your act together”, and suspected there “isn’t enough money” in GAP claims for CMCs to bother pursuing. Neither would responsible lending and affordability be the next target for a CMC as the area was too “woolly” and without legal precedent.
Car finance, said Hollinshead, was “stuck with PPI”.
Addressing unreasonable evidence in PPI claims, Hollinshead explained the definition used by the FOS was “fair and reasonable”, and there was “nothing more woolly than that”. There was “no logic” to the acceptance of evidence in PPI claims, said Hollinshead, meaning appeals may work and are worth doing if the claim is of high value.
Hollinshead also noted the Ministry of Justice was now looking at blanket claim letters, which he advised companies to keep and “if they’re all the same, report them”.
Other speakers
Peter Moat, managing director of the Blu Group, used the conference to announce the company’s intention to enter the car finance arena with a “backbone” of debt management giving the company an understanding of the subprime market, a £50m lending facility, and a model based on offering longer-term loans which could take the transfer of a borrower’s pension as future security.
Martin Fenton, managing director at Rapport Training Group, asked attendees to consider how the skills for the next generation of F&I professionals, honed from the principles of Pat Ryan in the 1980s, would be taught and concluded the answer was to “harness the power” of mobiles and the internet, an area in which the car industry had proven an early adapter.
Roger Gewolb, subprime entrepreneur, regaled guests with his story of the progress of the non-prime market and his call for theindustry to lobby government together for a more “fair” treatment of non-prime finance.
Nigel Armitage, sales and marketing support team leader at Frontline Solutions, gave an impression of the everyman’s appreciation of the industry and reminded attendees that car finance would prevail through a triple-dip recession.
Daniel Burgess, managing director of vehicle information provider HPI, led a tribute to industry relations director and “fantastic family man” Alan Bishop who died in February, aged 57, and explained HPI was to widen the remit of its law and policy advisor Professor Iwan Davies in response to the Competition Commission’s investigations into the private motor market.
Fred Crawley, editor of Motor Finance, told delegates car finance was one of the big stories of 2012, with 37% growth year-on-year by volume and 26% by value, which could no longer be ignored by the national media.
richard.brown@vrlfinancialnews.com, fred.crawley@vrlfinancialnews.com
