INCREASING regulation and compliance along with the paperwork and box ticking involved means that brokers are having to divert their attention away from what they really want to do – deals.
It’s these non-core activities that are leading to increasing numbers of smaller brokers considering becoming an Appointed Representative (AR).
The past 12 months have seen a steady increase in ARs as regulation has increased, the hardest hit have been mid-size brokers with staff levels of between eight and 15, where HR compliance becomes a time consuming issue.
So, is AR the way forward and will we see the rise of the super-broker at the expense of smaller outfits?
Tano Di Girolamo is Managing Director Fulton Leasing which became a Bridle Group AR last year. He is now the Franchise Director for the group is charged with heading the programme. Bridle’s ARs are given access to funding partners and manufacturer relationships.
They also have access to:
- CRM system
- Website including pricing updates
- Access to to Bridle’s intranet
- Sales support administration functions
- Staff training
- Funder quoting system fees
- Compliance
- Plus such as HR advice and Operational support
Alan Carreras, Director at Bridle Group said that AR is the way forward for many smaller businesses to help cope with increasing regulation, compliance and human resource issues.
He said: “Many of these back-office functions are a distraction for a business owner and the industry is now much more highly regulated than it was five, 10 or 20 years ago and the less people have to worry about the red tape the better – they can focus on doing the job.”
The concept of the super-broker, Carreras said, has been around for a while. “It maintains healthy competition and is very good from the manufacturer’s point of view as they can deal with a smaller pool.”
Last year SELECT Car Leasing announced a succession of landmark partnerships with several leasing brokers throughout the UK, as the company continues its rapid expansion. General Manager Graham Conway, General said that each partnership should be a mutually beneficial and successful experience for both parties.
He added: “The partnerships will form a crucial part of our long-term growth plan and ensure the Select brand continues to gain crucial footholds across the country and grow in stature over the next months and years”
Select Car Leasing Company Director Mark Tongue said: “These partnerships continue to play a crucial part in our aim to bring our offering, to more and more people in the UK. In taking on several longstanding and highly reputable businesses within the industry, we are optimistic it will be significant platform for further growth for the Select business, our representatives and the car leasing market in general.”
Nationwide Vehicle Contracts, one of the largest brokers in the UK, does not currently feel the need to take on ARs or franchise its business out. It does, however, have one partner in Northern Ireland – a unique market where business is often carried out on a very personal level.
Director Keith Hawes does see the attraction for smaller brokers to plug into larger groups. “There’s a number of reasons: they may be struggling to get funding or make deals while investment can be considerable. The cost of running a good website can be astronomical – a big investment for smaller brokers.
“Compliance and regulation all add cost and if these can be passed on to someone with more resources then it allows brokers to concentrate on their core capabilities.”
Hawes sees contraction through such things as ARs rather than growth in the industry. He added: “We may see disrupters trying to offer different ways to lease vehicles but the investment is enormous. There are various platforms offering services to dealers and brokers but you have to spend a lot of marketing money to get to the top of the search engines.”
That’s not to say that AR is the way all brokers are going. The general feeling currently in the industry is that there is still room for the small, family-run businesses with fewer employees and so fewer HR and compliance issues.
