Do you remember those pleasant days, now steeped in
history, when we could do almost anything we wanted to as
long as we did not commit murder or frighten the
horses? Peter Cooke
looks at the ways governance is changing how people do
business
Hundreds of years ago, we were subjects
of a hereditary monarch in whose name lots of things were done, of
which we probably would not have approved if we had known about
them – but we had no right to know so it was not our problem. To
keep them in line, once in a while we chopped off a monarch’s head
or expelled him; nothing too serious in the scheme of things.
Go deeper with GlobalData
However, that imagined universal liberty of doing
pretty well what we liked has been taken away in the pursuit of
good governance. No longer do we have obligations, we have rights –
but to protect those rights we have to conform.
Government is really obsessed with our rights and
their protection so they are trying to re-engineer society and
protect us by making us conform.
For example, we didn’t need a referendum over the
Lisbon Treaty in case we made the wrong decision. To protect our
rights and good governance we have to complete lots of forms and
have lots of checks to be sure we are alright.
We need to fill in forms and have checks before we
light a bonfire. After all, Guy Fawkes didn’t have the right
paperwork and look where it got him. To be good citizens we must be
approved, licensed, checked, granted permission by the state – but
it is to protect us from ourselves.
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 GlobalDataBut we should be happy to have pieces of paper –
eventually we will all be on a great big government computer so we
will not have to tick boxes because the computer will know what we
are allowed to do.
Some people might say the financial services
industry has moved forward to embrace this exciting idea of
liberty. To protect us from our greed it won’t grant us credit any
more.
Creditworthiness and protecting our shareholders
(you, through your taxes) and eventually allowing those
institutions to pay dividends to their shareholders (your pension
funds, so they can pay your pension if you can make the necessary
age) is all part of protecting your rights as a citizen.
Where does motor finance fit
in?
Do we as an industry blindly conform to
these current norms – or do we try to break out of the braces,
think outside the box, and offer state-of-the-thought ideas and
concepts to move the industry forward?
Wearing our hats as individual organisations, as
OEM captive finance houses, as retail banks, as finance houses or
as dealers, just how much effort do we devote to putting together
not only attractive finance packages – to us – but also interesting
deals which are accessible to every user who can satisfy our new
lending criteria and fulfil their debt obligations?
Or do we follow conventional wisdom and play it
safe?
Pre-credit crunch, so much cheap credit was made
available that many felt it impolite to refuse, and almost
mandatory to take up such generous offers; as a result, the credit
crunch has forced the finance industries towards an environment
similar to the loss of freedom highlighted previously.
The challenge now is a simple one. How might the
motor finance industry be rescued from the wider credit desert to
get the industry up and moving again – and almost coincidentally
rescue the motor trade?
Far more knowledgeable analysts than the present
writer have examined the deeper reasons for the credit crunch and
have written extensively about it. However, the real challenge is
how to rescue the finance industry.
Government, through its squadrons of regulators,
would appear to have introduced a range of protocols and procedures
and best practices as well as simple frighteners to regulate, and,
some would claim, over-regulate lending. At the same time, prudent
lending is to be encouraged, we are told. Which is right – and what
is the balance?
While management is judgement of shades of grey, as
the saying goes, as a finance industry is one in a situation akin
to the ‘personal liberty’ described earlier in this essay?
Everything is there to protect us, but are we being overprotected
from ourselves?
While balance sheets certainly have to be rebuilt
for future business prudence, are we reaching a situation where
prudence could take one out of the very markets we created and
leave a great big vacuum for new competitors like, for example,
Chinese and Indian credit providers to fill?
The car parc is ageing; scrappage may have been
politically astute short-term but is not a sustainable business
decision.
Given an improving economy, is the motor finance
industry really doing sufficient to rebuild and recover sustainably
– or has it become so protective, in practice or perception, that
it almost needs permission to be here?
Is this another case of giving away our civil
liberties in the name of good citizenship?
Happy New Year.
Professor Peter NC Cooke, KPMG
Professor of Automotive Management, University of
Buckingham
