Underwriting departments at non-captive providers keeping busy.

According to exclusive research conducted by Motor Finance last month, just under half of all proposals sent to independent finance houses are being approved, with 60% of this amount being approved automatically.

Of the total 80,450 applications for finance received over a given month by the pool of lenders surveyed, 49.5% were reported as accepted. On the other hand, the survey found one third of all proposals received were automatically declined.

The survey was conducted across the underwriting departments of 13 non-captive finance providers in the UK, representing 272 underwriters handling a total of £516.22m of proposals in the month studied.

During the month, some £242.59m worth of finance was approved, adding up to more than £3bn when projected over the course of a year.

The average approved loan size was £6,416 with an average term length of 42 months, with company deal averages ranging from under £3,000 to over £10,000 in deal size and average term lengths ranging from 30 months to 50.

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Surprisingly, though one would expect companies relying more on automated underwriting to have a smaller pool of underwriting staff in proportion to the total volume of proposals received, the survey showed no correlation whatsoever.

While one company surveyed received an average of only 14 proposals per underwriting head each month, underwriters at a lender at the other end of the range were found to be responsible for an average of 2,667 proposals per head each month.

On average, underwriting departments covered by the survey are handling an average of 692 proposals per head per month.

Smaller firms tended to favour manual acceptance or refusal over automated underwriting. Only one funder fielding less than 5,000 proposals each month accepted any proportion of proposals automatically. Overall, some 39% of deals were reported as manually underwritten.

Other trends observed included the preponderance of Experian among underwriters, used by 12 of the companies asked. Five used Equifax and three used Callcredit.

Nine employed ‘risk-based pricing’ but only six used scorecards, all of which also used risk-based pricing.

Of those underwriters surveyed, only one had all of their business come through brokers. Only one had all of their business come through dealerships, though two others reported receiving no business through brokers.

Asked about their appetite for risk in the year ahead, the term ‘responsible’ was emphasised by four companies, followed by ‘cautious’ (mentioned by three) and ‘optimistic’ (two).