S&U PLC (LSE:SUS) expects to get a boost from the new customer duty rules being introduced by UK financial regulator, the Financial Conduct Authority (FCA).
The second-hand car and bridging finance group believes its procedures and processes will be recognised by the FCA and it will gain a competitive advantage over less rigorous rivals.
“We now fervently hope that the Customer Duty's introduction will coincide with a much greater degree of regulatory consistency between the Financial Conduct Authority and the Financial Ombudsman Service,” it said in a statement.
Anthony Coombs, chairman, added that he was delighted with the way S&U's Advantage and Aspen businesses have “used the inevitable and sensible pause in growth of the past quarter to prepare the quality, regulatory and marketing springboard to capitalise on the great commercial opportunities now before us”.
S&U said trading had been strong in its first quarter, but there had been a slowing in demand for second-hand car loans at its Advantage Finance arm and in bridging loans due to the uncertainty in the property market.
Group profits between the start of February and 24 May 2023 were £300,000 ahead of a year ago, it said, in spite of a near £3mln rise in borrowing costs.
Net receivables [loan book] increased to £418mln (£340mln) with credit quality steady.
Car finance arm Advantage saw net receivables rise to £311mln (£268mln) with a record £48mln collected over the quarter.
S&U’s bridging finance business, Aspen, has 10 of 140 loans outstanding in default with that expected to be corrected shortly.
Aspen’s profits for the quarter rose by 21% with net receivables at the end of the period £107mln (25 May 2022: £72mln).
Over the rest of the year, S&U said it expects the second-hand car business to pick up again, helped by a new branding strategy aimed at loyal customers and also the FCA regulation changes.