Price and Value

1. Summary of our assessment: Hire Purchase (HP)

We have assessed that:

• Our HP product range continues to meet the needs, characteristics, and objectives of customers in the identified target market.
• The intended distribution strategy remains appropriate for the target market.
• The product provides fair value to customers in the target market (i.e., the total benefits are proportionate to total costs).

This assessment does not include any fees, charges or other costs you require the customer to pay to you for any products or services you provide that are separate or in addition to the product or services we provide. You are responsible under the Consumer Duty for assessing those products or services. If you believe that the customer is not receiving fair value in respect of these products or services, you must inform us.

2. Product characteristics and benefits

The products are designed to meet the needs of the target group, [non-prime customers looking to purchase a motor vehicle] the product features and criteria are designed to support these needs.

• Manual underwriting gives customers with impaired credit histories or ‘non-prime’ profiles an opportunity to purchase a vehicle on finance. Put simply, when other lenders have declined a customer, we will work harder to approve them for a loan.

• For ‘near-prime’ customers with less impaired credit histories, we have an automated process. This reduces the time and administration required for them to get an approval with an additional cost benefit which is reflected in the price of the loan.

• Manual underwriting allows greater understanding of a customer’s circumstances, it involves a comprehensive income and expenditure assessment to ensure they can afford the loan for the lifetime of the agreement.

• Non-prime customers are likely to have had poor experiences with complicated finance products before.  The simplicity and familiarity of HP along with the opportunity to speak with a trained underwriter should put customers at ease.

• HP includes ‘voluntary termination’ protection for customers whereby they can reduce their liability if their circumstances or need for the vehicle change in the future.

• Our HP product is available for vehicles with a wider range of age and mileage to enable customers to purchase the vehicle they want. We offer advances up to £15000, terms up to 61 months and a flexible approach to underwriting. This allows customers to purchase a range of vehicles within a suitable budget.

• We do not charge or add interest for late payments; therefore, a customer’s balance will not escalate if they experience financial difficulty in the future.

• We employ UK based Account Management staff, allowing customers in financial difficulty to get tailored forbearance on their first call to us.

3. Target market assessment and distribution strategy

This target market assessment matrix segments the target customers for the product, recognising their different needs to enable you to tailor the services you provide when you distribute the product.

The product is not designed for customers who:

• due to their credit history can take out loans at ‘high street bank’ prices (prime customers).
• do not wish to own the vehicle at the end of their agreement.
• do not wish for their finance product to be secured against a vehicle.

4. Customers with characteristics of vulnerability

• The product is designed for non-prime customers hoping to purchase a motor vehicle which is likely to include some with characteristics of vulnerability or who will experience vulnerability over time.

• We believe that the target group may have lower financial resilience which could increase their chances of becoming financially vulnerable, therefore, more care and support is required for some customers, which our service provides. Considering the financial resilience of our target market we provide no late payment charges or interest meaning that balances cannot escalate if customers experience financial difficulty. Our UK based Account Management staff allows customers in financial difficulty to get tailored forbearance on their first call to us.

• Intermediaries should continue to comply with your obligations to ensure that you treat customers in vulnerable circumstances fairly. Please contact us if you need any further information about how we support the needs of all our customers in relation to the product.

5. Our assessment of value

• We have developed a comprehensive and robust assessment process which evaluates several aspects of our business to determine the value of our manually underwritten HP product. This analysis is used to ascertain whether the product delivers fair value for customers.

• The outcomes of the assessment process are presented to our Board of Directors, allowing for challenge and further investigation before we sign-off the outcomes and share the summary of our assessment with you.

• Our fair value assessment has considered the following:

6. Results of our assessment 

Our assessment concluded that the product continues to deliver fair value for customers in the target market.