Lease Company Actions Reduces Competition

Monday, 23. November 2009

Brokers don’t work for the leasing companies, they actually work for their clients, in the same way as an accountant or a solicitor does but without the need for a qualification, just a Consumer Credit Licence, which can be obtained fairly easily if the program about loan sharks aired by BBC’s Panorama is anything to go by. When I started as a broker, many years ago, the situation was the same, we worked for our clients with our fees being paid out of the rental that was charged to the customer. However, in those days the leasing companies took the responsibility of the broker seriously and as experienced and knowledgeable as you may have been you were still expected to attend training courses if you were to represent a lender. But over the years this has changed, very few courses are offered to brokers and as long as you have the ability to propose a pile of business you would be taken on. From the bucket shop broker’s point of view, as long as the leasing company could provide a very cheap rate the broker would want to use him without the slightest interest in the terms and conditions offered by the leasing company to his clients. As a result, a great deal of bad business has been provided by these brokers to the lenders, who are now pulling out wholesale from the broker market, reducing the amount of choice to the potential customers. At the same time clients are suffering huge penalties, included in the contracts that they probably never read, by choosing the cheap rate route through the bucket shops, many of whom have probably never read an agreement either. For the few professional brokers out there, it means that we have fewer deals to offer and customers left with less choice. The leasing companies in the meantime have been working to fill the void left by the brokers with one of the latest to dump brokers, Hitachi, choosing to offer their product via their 1,200 strong repairer network. Whilst the repairers will simply act as introducers there is always the danger that they will give out some bad advice. It’s only natural, if someone that you trust, in this case to repair your car, recommends a product that you ask about it and potentially buy into it based on his advice. We are talking about the financial advice of a repairer. This has danger stamped all over it and I suggest to Hitachi that they think again about offering their product through this route which is probably aimed at newbies to the leasing products who can be sold into higher rates. If you fit into this category you should seek out a professional broker and get him to look after you. He may not be the cheapest every time but you know you can rely upon his advice and recommendations. By Graham Hill