Proactive - Interviews for investors

S&U chairman Anthony Coombs on resilience amid new regulations

S&U PLC chairman Anthony Coombs the company's interim results to 31 July 2024 and the outlook moving forward. Coombs acknowledged the challenges faced by the Advantage motor finance division, largely due to regulatory changes and higher provisions. However, he emphasised that these issues are temporary and expects improvement next year.

"We are working very closely with the FCA to emerge stronger, more compliant, and more efficient," Coombs said, highlighting ongoing efforts to adapt to the new consumer duty regime. He also mentioned the positive performance of the Aspen Bridging business, which saw a 43% increase in its loan book and a 42% rise in profit before tax, reflecting strong growth among property developers and investors.

Looking ahead, Coombs remains optimistic about S&U's overall business trajectory, citing the strength of Aspen and expectations for future regulatory clarity in the Advantage business.

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Broadcast on:: 08 Oct 2024
Audio Format:: other

Hello, you're watching Proactive, I'm joined by S&U chairman Anthony Combs. Anthony, very good to speak with you this morning, you're up to your interim results and despite a challenging period for your advantage business, you've announced the first of your three dividends for the year, so you're obviously confident that this is a temporary hiatus. Well, he obviously writes to you, but we do regard this as being temporary, obviously the reduction in profit, there's been always entirely taken up with an increase in provisions, and in addition to that, some increase in underlying finance costs. We expect the provisions not to be required next year, and as a result, he is temporary. That's not to say that the Seattle has challenges, and I think that everybody is settling into the new consumer duty regime, which the SCA introduced in July last year, it's an incredible promise, and we're working very closely with them in order to ensure that not only do we advise from this more profitable, but we will still emerge from it more compliant, more efficient, and stronger as a result. So, take us through the impact that these regulatory changes have had on your advantage in much of financing business to Anthony. Well, I mean, obviously, we had a 166, so you call it section 166, and a voluntary requisition, which is like on huge in terms of they stay voluntarily going to agree something that we require you to do, but nevertheless, we've done that. It's had an effect in two ways, really. First of all, in terms of how we're able to correct our customs, and how we do with it. We've always prided ourselves for a 25-year history of having action personnel comes, and that has been evidenced by the fact that our trust pilot ratings are about 4.8 out of 5. And when we go to fire to ombudsman service, we're one of the hardest achievers in the industry in terms of only losing about 15 percent of the places that we are abroad. So, we do have very good, very good customer records. That, unfortunately, was obviated, if you like, when the FCA looked at only 10, 5,000 or 65,000, first of all, and then a skilled person indicated certain parts of our business that we needed to improve, and we've done that. But in the meantime, we had to make changes, which obviously, for instance, included changes in our position on representing, changes on how we collective customers can fall into arrears, changes on for the ability to assert extent, although that's the problem, the collection. But now, that's all disappearing, and it's due to disappear. We are hoping to hear that that's two or three days from the FCA, that the VRAC is being lifted, but those who can't take anything for granted. But we do think that we do think the things will come a little bit more, if I can. And as a result, we can get back to being the norm, very good service. We give to our customers. That's all we want to do, you know, irrespective of what the regulatory regime is concerned, we've always felt that we do give a very good service to our customers, that we treat them as friends, we treat them, we'd like to treat it in a really overtly Christian way. And frankly, it's always been a bit disappointing to hear that we may not be serving the garbage by the et cetera. Well, I think that's going to change, and we'll be back to normal the future. The other side of your business, though, Aspen has been doing very well, Antony. So the loan book at 43%, 149.3 million, profit before tax at 42%, so a very strong showing there. Yes, I'm just erasing. It's in the non-related sector, and one could say that there is a connection, in other words, that the free market is allowed to operate more there than it is in the regulated fires or services sectors. I'm not going to make any comment on that, but the fact is that we go from strength to strength. We've got an increasing pool of borrowers, particularly among small developers, who really have not been able to change finance from the banks over the last few years. And we anticipate that that is a very big growth market. You saw, I think, very early yesterday, the house prices in the UK are at all near a record high. And that indicates there's tremendous demand for products, which are properly priced, and which are properly constructed. And we do a lot of business with small developers. We do a lot of business with investors, buy electric investors, both small and large, and we expect those avenues of business to continue. Anthony, how's the second half of your financial year looking so far? Well, I mean, I'm not going to make any promises seem to me. We're still out of the VREK with the RCA. That's the biggest part of our business. I mean, the bridging fire business aspect is going very well, but we're still out of the VREK so obviously the effect on our collections, and also to a less extent on ourselves, is still being felt. Once that VREK is out, and we can operate in a more flexible way, I don't mean normal to blind, I mean, to blind with flexibility, then we expect things to significantly improve. We obviously have to do the joy of the half year, the huge amount of retraining of our staffs, who have to process, have to document things that they've taken for granted as just being assumed in the past, but that doesn't make them non-compliance in its incentives. Since we are making the changes to our procedures, we have got a lot of training, and we have to as a result, we anticipate being more efficient and more compliant. I hope you'll keep us updated with any progress you make. Thank you very much for speaking with us today. Thank you. That's SMU, Chairman Anthony Combs.