Businesses in the UK are facing long-term uncertainty about what the future holds amid unique political and economic changes in the country.
However, there is no pause button in business and companies are having to adapt their strategies to focus on growth in a changeable business climate.
For Ian Isaac, who took the reins as managing director for Lombard at the start of this year, the asset finance industry has a key role to play in offering guidance and stability to customers.
This involves a focus on traditional qualities that have stood the test of time to help prepare the industry and clients for any challenges ahead.
These key areas include offering stability of service and expert knowledge from a trusted brand, while committing to providing education about finance for the benefit of the market.
Isaac says: “If you run a business, you typically draw on your trusted partners and it is our role to be a source of expertise and to be trusted.
“Our role is to help customers understand the funding options available and the choices their peer group is making to give them confidence and trust in our insights.
“We want to be there to help shape decisions and become more involved in providing effective support. We have the qualified people who have trained so they can help companies overcome their challenges.”
Isaac has returned to the role of managing director for the second time, having previously held the position on an interim basis in 2013.
Most recently, he was running the SME commercial business function within Lombard that primarily supports customers of sister companies Nat West and Royal Bank of Scotland.
His new role expands his responsibilities, leading a team of 14 department heads and more than 250 relationship managers, and gives him oversight over the whole of Lombard’s £9 billion portfolio.
His focus is on satisfying the needs of a broad spectrum of customers from sole traders to large corporates, with a commitment to delivering this through the best advice and products offered by skilled, professional employees via a choice of channels. Lombard’s relationship team are based throughout the UK and in addition there is a telephony-based team and a new car and van digital channel.
He feels the business can offer a solid foundation for customers as a stable, market-leading supplier that has the size and strength to adapt to future changes.
Through its specialist asset finance teams, Lombard focuses on engaging closely with customers to secure their trust in the business, he says.
The importance of training
A key factor in earning this trust is training for staff and Isaac supports education both within the business and throughout the industry in his role as chairman of the asset finance division of the Finance and Leasing Association.
Lombard has trained hundreds of customer-facing relationship managers, putting them through a lending skills qualification from the Chartered Institute of Bankers.
It is also supporting the development of training programmes offered through the Finance and Leasing Association.
Isaac says: “It is part of our ambition to give staff bespoke and relevant skills. During my career it has become more apparent of the need for this and my new role allows me a greater opportunity to influence the agenda.
“We need to ensure our employees have a strong understanding of the role asset finance plays alongside broader funding options so they can effectively engage with customers about their needs. I am driven to ensure we can meet the different needs of our wide variety of clients.
“In terms of raising awareness among businesses about asset finance, Lombard has a big responsibility to deliver this message as the leading brand. It is essential that the products and services we offer are transparent. There must be no hidden catches or fees and it is our duty to ensure that our customers understand the commitment they are making and have the capacity to fulfil their obligations.”
The need for ongoing training and awareness raising is so important that it has formed one of the three key pillars of Isaac’s approach in his new role.
The pillars cover internal collaboration to ‘fly the Lombard flag’ and engage with customers through the networks of Royal Bank of Scotland and Nat West.
Secondly, he ensures he spends several days a month meeting customers face-to-face to understand their developing requirements and promote the role of asset finance in a modern business environment.
Finally, there is a key role of inspiring and leading employees to support business growth, driven by high levels of customer service and professionalisation.
Despite the ongoing economic uncertainty, businesses remain confident, he says: “Industry confidence levels have been resilient through all the changes that businesses have faced. It is sustainable and really positive.
“However, where businesses are faced with investment choices, there can be uncertainty about the right path to take. Often it is only after investment decisions have been made that asset finance companies are approached.”
Encouraging closer customer relationships
Isaac would like customers to engage with asset finance companies at an earlier stage to make maximum use of Lombard’s expertise.
This is particularly the case with SMEs, where Isaac has special insight from his previous role.
In line with his commitment to transparency in the service offered, last year Lombard partnered with venture development firm Prehype to introduce Nift, the UK’s first digital contract guide designed to help make contracts easier to review and understand.
Lombard’s research indicated that a significant proportion of consumers do not read the small print because of the complex technical language.
Nift provides a guide which helps customers navigate their contracts, translates clauses into plain English, defines complex words and helps explain the contract’s clauses by giving real-life examples.
In initial tests, 92% of customers found it useful and said it made them pay more attention to the contract than they normally would.
Lombard offers finance in a wide range of areas including automotive. In addition to the core Lombard products of hire purchase and leasing, its Lombard Vehicle Solutions brand is operated through a white label partnership with ALD Automotive that was launched in 2012 to provide full service contract hire to fleet customers.
Other sectors include agriculture, production equipment, construction and materials handling, commercial vehicles, aviation, green energy, leisure/ marine, media/broadcasting and technology.
In each case, Isaac believes the strength of Lombard lies in the extensive knowledge the business can provide to help customers understand the economics of a project, in addition to the role finance will play.
For example, in green energy, businesses need guidance to support the economics of investment in wind power and power storage using industrial batteries.
The automotive dealer sector is also undergoing substantial change.
Isaac says: “There are three key areas that are changing the shape of the automotive sector - how cars are powered, driven and owned. Customers need to consider the whole life costs and overall efficiency of their vehicles.
“There is a generational shift in the way people use cars, with a change from ownership to usership. PCPs are the first stage of that shift. We aim to assist our customers to understand these dynamics and how different funding options can support their preferred ownership model.
“In this environment, what is the role for long-term car finance as people move to pay as you go? What role does asset finance have to play in these trends as the model changes? As a wholesale financier, we are interested in working alongside the industry to adapt to these developments.”
The importance of economic stability
In the short-term the focus is on political changes, with the general election next month and two years or more of Brexit negotiations to follow.
For Isaac, the key focus for politicians needs to be on stability and clarity for business, as this will drive the economic fortunes of the country going forward.
He says: “Companies are making decisions relating to business strategy for the next five to 10 years and politicians need to be mindful of that.
“Confidence is a big driver of economic growth. A stable climate gives businesses the confidence for investment and growth.
“Therefore, Lombard’s industry message will be the need to create a stable climate for businesses to thrive and grow, to avoid disrupting their business ambitions.”
Legislation is a particular concern, both in his role at the FLA and Lombard, ranging from the need to update the Consumer Credit Act to the impact of a range of recent legislative changes.
Isaac adds: “Legislation needs to be simplified to make it easier for businesses to access finance with regulation that is proportionate. Regulators need to be mindful that they don’t make it too difficult to offer competitive products, which would hold businesses back.”
Just as Lombard views its role as a source of stability in uncertain times, the same messages need to come from politicians, he says, adding: “Whatever happens, government needs to invest for the future and the asset finance industry will be there to support every step of the way.”
Promoting training through the FLA
Ian Isaac was confirmed as chairman of the Asset Finance Division for the UK Finance & Leasing Association (FLA) last year.
In his role heading up the division of the principle trade body for the asset, consumer and motor finance sectors in the UK, he is focusing on education as a key factor in driving industry growth.
Commenting on the role at the time of his appointment, Isaac said: “The leasing sector has played a fundamental role in supporting the UK’s economic growth and it is becoming more widely appreciated that asset finance has an important role to play in funding the new equipment and technology which drives business growth, and also UK competitiveness in the global marketplace.”
However, he added that there is need for greater education of the benefits offered by asset finance.
He said: “In my new role as chairman of the FLA’s Asset Finance Division, I intend to focus on promoting what we can offer businesses as a whole, and demonstrating how we can help firms who want to succeed, whether at home or in the wider global marketplace.”
This is supported the work of the FLA which focuses on three areas - increasing professionalism in the industry, raising awareness of the role of funding options and lobbying for appropriate regulation.