The company, which provides car finance through its subsidiary Advantage Finance, reported that trading conditions had ‘burdened’ over the first half of its financial year
S&U, a specialist lender in the motor finance industry, has painted a gloomy picture of current market conditions after a recent legal ruling caused “chaotic market conditions”.
The company, which provides car finance through its subsidiary Advantage Finance, reported that trading conditions had “burdened” over the first half of its financial year. This strain has come about following a Court of Appeal decision stating it was unlawful for car dealers to receive commission from lenders without informing customers fully.
S&U lamented that the ruling “sought to impose a new, but retrospective, duty of care on lenders and brokers throughout the sector”. Consequently, the verdict led to what S&U described as “chaotic market conditions”, compelling some financiers to halt lending.
As a result, advances, a form of short-term credit, tumbled by 33% so far this year compared to last. They also flagged the recent Government Budget’s lacklustre reception, which together with the court’s decision, has sunk consumer and business confidence to the lowest ebb in four years, thwarting growth opportunities in the sector.
Regarding its internal metrics, Advantage Finance’s net receivables stood at £295m at the close of the period, marking a decline of 10% from the prior year. S&U attributed their buoyed financial performance to the success of their property bridging finance division, Aspen Finance.
The firm has benefitted from smaller entrepreneurs seeking to “fill the gap” in governmental housing targets, thus generating increased bridging opportunities, it reported.
