A Testing 2005 For Brokers ?

With the advent of 2005 comes a year of decision making for many of the UK's 3000 vehicle finance brokers. Consolidation, plus the reluctance to pay for a nationwide team of sales representatives, has over recent years led to many finance lenders to rely for new business on a portfolio of brokers, either under branded schemes or through alliances.

To date the result has been that dealers get a friendly, local contact while the lender gets access to more customers than when otherwise would be the case. "With a good bro, the application with their expert knowledge with the industry together with the placing of deals to the appropriate panel of lenders, ensures that dealer get the best service and customers the best price." said one lender.

However, the majority of brokers still operate as "independent islands" priding themselves on independence and cutting themselves off from trade associations. They often remain blissfully unaware of approved industry codes of conduct, unacquainted with changes to relevant legislation and unable or unwilling to adopt technology updates. For the majority of motor finance brokers "phone and fax" are still the order of the day as they have been for many years.

One significant move forward has been the tentative development of broker associations of which Unity Facilities is a prime example. Established in 2000 in partnership with DSG Financial Services Ltd, Unity acts a central liaison point between brokers and funders. Unity's managing director, Steve Carroll, explained that customer applications, ranging from prime to mid or sub prime are received by Unity from the company's broker agents. These are then forwarded, through Unity's standard process, to the most appropriate funder.

This allows the funder to cut costs and management resource by having one relationship. "In turn, Unity's team relays credit decisions and administration back from the funder through to the broker", said Carroll. "In this way, being a member of Unity allows a broker to maintain it's Independence, pursue facilities other than Unity and manage it's business the way it wishes."

It is Unity's sheer collective buying power that produces a range of products that brokers would be unable to achieve independently. In return, Unity seeks as partners those brokers which have knowledge of, and expertise in, consumer motor fiance, office premises, dedicated administrative staff and "a long term objective and desire to continually improve standards."

In addition, Unity is encouraging it's supporting brokers to adopt MAIA, it's recently developed broker control system which came on stream last July. "The broker market is changing, and we need to do less business with paper, writing faxes, telephoning and generally wasting time." said Richard Hoggart DSG's managing director.

MAIA is designed for brokers to manage their proposals and transacted deals more efficiently. It has capability for the electronic transmission of proposals to funders and the communication of decisions to dealers, and enables contact with the sales team by email. "It is vital for brokers to adopt 21st century technology" Hoggart stressed.

Many UK motor finance brokers also have the expertise to place fleet business. In 2003 Lloyds TSB Autolease launched a specialist web based broker division, aimed at developing it's small to medium sized fleet business through over 30 local brokers and intermediaries. The company's managing director, Nigel Stead, believes that the importance of motor brokers to motor lessors will become even more paramount as the industry continues to consolidate.

Many industry observers are puzzled that more motor finance brokers are not willing to join the trade associations of the sector, especially the recently formed association of vehicle finance brokers. "At the end of the day, it is a question of balancing the advantages of joining against the disadvantages. Until the association lifts it's game and is perceived to relate more to brokers, the continuing apathy will continue," one broker explained.

General industry opinion is that 2005 will see stronger competition between brokers as demand in the showroom tapers off. It is likely that only those brokers that are able to impress funders with their professionalism and scale of turnover - which for many will mean joining associations such as Unity - will end the year as well off as when it commenced.

Brian Rogerson - Deputy Editor Motor Finance Magazine December 2004

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