AFC Autumn Conference – reimagining the customer journey

This November’s Asset Finance Connect (AFC) autumn conference, headline sponsored by FIS, saw the largest ever number of delegates, with over 500 attending presentations and breakout sessions over the course of the day. The high level of participation was a response to what Asset Finance Connect CEO Edward Peck called the “rollercoaster” of events since the Court of Appeal decision in three auto finance cases in late October.

“Our original conference plans changed overnight. There is no doubt that the judgment has big consequences – but it’s far from clear what the impact will be, and how the industry should react, so the conference became the place for lenders, brokers and tech providers to explore next steps,” Peck said.

Complexity

In the immediate aftermath of the ruling, complete paralysis in the asset finance market was avoided, with the FLA intervening rapidly to provide a briefing for its lender members, and representation to the Treasury. But the morning plenary session at the conference underscored the significance of the Court of Appeal’s unexpected ruling relating to fiduciary duty.

As Wayne Gibbard, from AFC’s legal partner Shoosmiths, explained: “This puts the relationship brokers and lenders have with customers on a par with, for example, the doctor/patient relationship.

“It sets quite a high standard, but what the court has done is try and analyse a particular situation and characterise that – a lot now depends on whether there are similar ‘fact patterns’ in other commercial arrangements, which is very difficult for lenders and brokers to assess.”

Challenge

Finding the remedy in such circumstances is not easy, given the need to assess the circumstances of each case. Delegates raised questions for the expert panel around when a disclosure should be made, what elements should be included, and how the fiduciary relationship should be explained in customer documentation.

While moving to a single document used by all lenders might seem an attractive, and efficient response, Stephen Haddrill, FLA director general, cautioned against a “one size fits all” template, citing concerns around competition law if a trade association was to mandate a particular approach, as well as the difficulties of taking into account all possible circumstances.

Jim Higginbotham, CEO of NACFB, emphasised the critical requirement that documentation from lenders and brokers is aligned and consistent, so that all parties are demonstrating the same behaviour.

“We’re in a hiatus at the moment, and until we get clarity from the Supreme Court, it is a matter of judgment, depending on an organisation’s risk appetite and business model,” he said.

Collaboration

However, the industry cannot afford to remain in stasis for months. Faced with what some in the discussions labelled “a potential tsunami” of claims for redress, and concerns about the implication for lenders’ back books, two specialist seminars considered how auto finance market participants might react, and a possible framework for auto and asset finance brokers.

In both instances, the emphasis was firmly on all parties working together to create a low-friction, easy to understand, customer journey.

All agreed that there is now no going back on commission disclosure, with several commenting that “the genie out the bottle”, but the form and the timing of any disclosure are top of lenders’ and brokers’ wishes for the future, amid concerns that balancing those factors in a competitive market is difficult.

“The question is where is the value added to the customer experience, and how do we articulate that – and the costs – to the customer,” Higginbotham said.

Delegates’ discussions ranged over different types of commission arrangements, how to differentiate between “sophisticated” and “unsophisticated” customers, how to minimise disruption to the customer with multiple requests for consent, and how to educate government and the legislature about the contribution the asset finance industry can make to the UK’s economic growth.

Innovation

In the afternoon, there was a look at one of the industry’s recent examples of collaboration in the creation of Lumia, an asset fraud detection tool launched by Acquis in the wake of the largescale fraud detected at Arena TV, and which now has over 30 lenders contributing data on contracts on a monthly basis to provide a way of sharing knowledge and spotting potentially unusual trends.

The Asset Finance Connect conference sessions also made time for a suite of workshops looking at how technology can support lenders and brokers in the auto, asset and equipment finance market, with sessions facilitated by Finativ, FIS, FICO, Alfa, Tomorrow’s Journey, and Nivo.

The Next Generation workshop, in association with the Leasing Foundation, also returned to the AFC conference allowing the next generation of industry talent to discuss the future of the industry focusing on change and innovation, and progression and development.

Two regular slots rounded out the programme. The Fintech innovators saw four finalists pitch their AI-based solutions to industry use cases to a panel of Dragons led by Steve Taplin, MD Asset Finance, Lendscape. VAMOS proudly secured the AFC Fintech Innovators Award, sponsored by Lendscape, recognising Lucero, their AI operations assistant.

AI was also the topic of discussion in the AFC Soapbox Project, where two experts from law firm TLT debated whether the auto and equipment finance industry needs clarity on UK AI regulation in order to properly leverage its value.

Finally, the drinks reception which concluded the day saw the presentation of the Leasing Foundation’s “30 under 30” awards to the next generation of industry leaders.

Edward Peck, AFC CEO, said: “This was our biggest conference yet, with delegates keen to take the opportunity to network and discuss key industry issues with their peers. It was a packed day, but the feedback we had was that people were delighted to hear from our panels, which included legal experts, the main trade associations, lenders, brokers and tech providers.”