New Motor Finance Head ready with plan for new regulations & compliance

dally adrian

Adrian Dally was appointed Head of Motor Finance at the UK Finance & Leasing Association in February 2015. He brought with him a career background in the civil service and was, for the previous nine years, Head of Policy at the Financial Ombudsman Service.

Moreover, he joined the association at a time when the UK automotive finance sector is buoyant and experiencing rejuvenation in terms of volume and profitability – elation, however, that is counter-balanced by the shock & awe of regulation and compliance challenges posed by a new reforming body – the Financial Conduct Authority.

Dally was born in Yemen and grew up in the small market town of Epping, Essex. His father was a British Army brigadier, so the family moved around. Schooling took place at the Douai School in Berkshire –a public school that was run by the Douai Abbey Benedictine community.

“Attending a school run by monks gave me a values-driven approach to life,” he explained. “Indeed my initial thoughts were to enter the church as a priest. In any event I did not wish to follow my father into the armed services.”

For Dally, the eventual path took him to the University of Essex to study Linguistics & Philosophy in 1985.

A radical place

“The university at that time was considered quite a radical place to be studying, and I felt the influence of reformist ideas would give me a more balanced outlook on life.”

Thereafter he entered the civil service on a fast career track programme.

His long-standing interest in bird watching, and nature-matters generally, inclined him towards the Ministry of Agriculture, Fisheries and Food (MAFF) where he worked for four years, rising to the post of Private Secretary to John Gummer, the Conservative Minister at the time.

Dally’s next career-programme placement took him to the Foreign Office where he worked at the UK Representation to the European Union in Brussels. There he negotiated on behalf of the UK Government from 1992 to 1997 –  a crucial time which included such major events as the Maastricht Treaty and the BSE crisis.

He said: “The BSE crisis, which led to the European Union banning exports of British beef, and which lasted for 10 years before it was finally lifted, was actually a disaster for Britain. It was exacerbated by the poor regulation and compliance in the UK food industry, and a serious lack of transparency in the way both the industry and the Government conducted themselves.  I learned much from this example of how industry sectors should not be run.”

Consequently,  his next move took him to the newly-formed Food Standards Agency in 1997 as a founding official, and he was instrumental in helping to set up a new regulatory model designed to protect the public and industry.

“The challenge,” he said, “was to create protocols which adequately managed risk in the food industry in an evidence-based manner – and to do it transparently. It was quite a radical approach back in the 1990s.”

After six years the model was established, and working well, so it was time for him to move on.

The recession hits

The Financial Ombudsman Service (FOS) was established in 2000 and, following expansion, wanted to recruit a Head of Policy in 2006. Dally was approached and, following the interview processes, gained the position. He had barely three years to get his feet under the table, however, before the Great Recession hit in 2009 and the financial services industry found itself in turmoil.

Serving as a link between the FOS & Government, the FOS & Financial Services Authority as well as the FOS and Brussels, kept his team of 22 extremely busy during this “very interesting” period.

It was at this time that he became acquainted with the Finance & Leasing Association which to Dally: “stood out as being the trade association most engaged with its members. Trade Associations are crucially only important if they are engaged successfully with their members.”

He added: “During this time of upheaval in the industry I found that the FLA led by Stephen Sklaroff had its finger firmly on the button of the issues concerning the industry. It was open, friendly and easy to engage with.”

By 2015, following some nine years at the FOS, and with regulatory matters settling down somewhat, Dally “was tapped on the shoulder by the FLA”. “I had always been interested in motor cars,” he explained, “and impressed with the high standards of the auto finance industry – at the FOS, complaints about this sector were very low indeed.”

“Furthermore, I had experienced the effectiveness of the FLA’s Specialist Automotive Finance (SAF) training when I was sold a car on a Personal Contract Purchase plan by an SAF-accredited dealership. It struck me that the market was working well for customers, manufacturers, lenders and retailers.”

Nevertheless, his biggest challenge upon becoming Head of Motor Finance at the FLA has undoubtedly been continuing the association’s work for members following the recent assumption of regulatory responsibility for the auto finance industry by the Financial Conduct Authority (FCA).

Twin challenges

“The industry faces the twin challenges of, on the one hand, getting to grips with a detailed and complex regime that was put together in haste by the FCA while, on the other hand, understanding the new regulator’s over-arching objective which is to ensure that the customers’ interests are at the heart of every firm’s business model.”

Prior to Dally joining, the FLA had been investing significantly in a rolling programme of seminars, training sessions and events for members explaining the FCA regulations and approach.

In addition, during his three-month tenure Dally has wasted no time in acquainting himself with the association’s 38 automotive finance members. “I set a personal target to visit all members by the end of 2015,” he said, “and I’m half way there. It has been a refreshing experience, with every company I have visited so far well managed and fully aware of the new regulations and making provision for them into their business models.”

The current FLA figures for April 2015 show that the post-recession boom in UK car finance is continuing strongly with point-of-sale consumer new car finance up 11% by volume, and 17% by value, compared to the same month in the previous year.

The value of advances for new car finance is £14.6 billion for the 12 months to April 2015 – a significant rise of 14% over the previous year. For used car finance the annual figure is £11.1 billion – up 16% over the previous year. Equally encouraging are the amount of new cars bought by businesses in the year to April 2015 – some 498,938, representing a rise of 13% in volume over the same period the previous year.

“The auto finance market is now characterised by a wider choice of finance options,” Dally stressed. “The consumer automotive market is a very different place now with transparency being a major factor in the buying process.”

He added: “Consumers are better informed nowadays and the point-of-sale model is of necessity changing. The FCA’s focus of putting customers at the heart of business models reinforces this.”

Level of engagement

Looking ahead, Dally intends to “get to know my member colleagues more thoroughly and increase the level of engagement with them all”.

“I think it’s important to stand back and actually look ahead five years from now, when we’ve overcome the regulation hurdles and say ‘where do we go from here?’

“We now have a new UK government and a new European Commission in place and both are saying strong things regarding future regulation. So in the next five years we must seize the opportunity to get thinking about where we are going in the long term.”

In any event Dally intends to apply the rules of engagement he has learnt work most effectively for any regulatory body – a model that manages the risk with an evidence-based focus in a modern transparent manner.

Meanwhile he continues his passion for bird-watching, extending it currently to a love of botany, thus becoming a field naturalist around his Essex countryside with the help of his wife and two sons aged 10 and 13 years.

He has been chairman of the Essex Birdwatching Society and, together with the assistance of his sons, is a regular contributor to the British Trust for Ornithology’s Wetland Bird Survey. He is also proud to be the re-discoverer on the Blackwater Estuary of the Hairy Vetchling, a type of sweet pea thought to be extinct in the UK for around 40 years.

Most immediately, back at the office, Dally is closely involved with the recent launch of the FLA’s brand new SAF Advanced qualification.

To date, SAF has some 26,399 active users and enjoys the support of 254 SAF approved firms (those which have put all of their customer-facing staff through the online SAF test).

“Indeed,” he added, “most of the large dealerships are now SAF approved and the new qualification is designed as the next step for dealership staff who have already passed the existing online SAF test – it will help motor finance professionals to further enhance their skills.”