S&U PLC (LSE:SUS), a financial services group listed on the London Stock Exchange, recently released its interim results for the period ending 31 July.
Chairman Anthony Coombs shared his perspective on the challenges faced by the company, particularly in its Advantage motor finance division, due to new regulatory changes.
Despite these hurdles, Coombs remains optimistic, citing significant growth in the company's Aspen Bridging business and a positive outlook for the year ahead.
Proactive: You're out with your interim results, and despite a challenging period for your Advantage business, you've announced the first of your three dividends for the year. So, you're obviously confident that this is a temporary hiatus?
Anthony Coombs: We do regard this as being temporary. The reduction in profit is almost entirely due to an increase in provisions and, to a lesser extent, higher finance costs. We expect these provisions not to be required next year, so this is a short-term issue. That said, this year has certainly had its challenges. Everyone in the industry is adjusting to the new consumer duty regime introduced by the FCA last July, and it’s a gradual process of adaptation.
Proactive: And how are you working through these regulatory changes?
Anthony Coombs: We're working very closely with the FCA to ensure that we not only comply with the new regulations but also emerge stronger, more efficient, and more profitable. It's a process that requires a lot of collaboration and adjustment, but we’re making good progress.
Proactive: Can you take us through the impact of these changes on your Advantage Motor Finance business?
Anthony Coombs: Certainly. We've gone through a section 166 process, which included voluntary requisitions—despite the odd name, it’s a requirement we had to fulfill. This process has mainly impacted how we collect payments from customers and manage arrears. We've always prided ourselves on delivering excellent customer outcomes, as demonstrated by our 4.8 Trustpilot rating and strong results with the Financial Ombudsman Service.
However, the skilled person review highlighted some areas where we needed to make improvements, especially in our repossession and collections practices. While disruptive, these changes are temporary, and we’re now awaiting final confirmation from the FCA. We hope for a positive outcome soon, which will allow us to move forward.
Proactive: Despite these challenges, Aspen has been performing well. Your loan book is up 43%, and profit before tax has increased by 42%. What’s driving this growth?
Anthony Coombs: Aspen operates in the non-regulated bridging finance sector, giving us more flexibility in how we operate. We’ve seen strong demand from small property developers and investors who are finding it difficult to access funding from traditional banks. With UK house prices nearing record highs, the demand for short-term finance remains strong. We expect continued growth from developers and buy-to-let investors, and Aspen is well-positioned to capitalize on that.
Proactive: How is the second half of the financial year shaping up for S&U?
Anthony Coombs: I can’t make any specific predictions, but we’re optimistic. Aspen continues to perform exceptionally well, and once we have clarity on the regulatory situation at Advantage, we’ll be in a stronger position to operate more flexibly—while still adhering to compliance standards, of course. We’ve invested in retraining our teams, and we expect this will not only improve our efficiency but also help us return to growth in the coming months.