UK asset finance

Propel – Championing the SME


Propel Finance has enjoyed soaring growth of 92% over the last year. What is driving this growth as the economy faces headwinds that could challenge the asset finance industry once more?

As an independent asset finance specialist lender, Propel has seen a rapid rise in delivering asset finance to SMEs; reflecting both the investment in its staff, its technology and its desire to work with its partners – whether financial or manufacturer – to provide SMEs with vital access to finance.

Propel’s most recent partnership with Samsung Capital highlights Propel’s capabilities as an SME specialist. Samsung, like Barclays, introduce their SME customers to Propel in an accretive ecosystem business model, based on their confidence in Propel’s technology platform and customer service

In a recent interview with Jon Maycock, Commercial Director of Propel, Asset Finance Connect discussed the main drivers of growth with Jon – robust funding, distribution partnerships and efficient customer centric systems.

Samsung Capital

In their strategic partnership with Propel, Samsung Capital are introducing their business customers to a specialist which is a mutually beneficial way of helping SMEs. Propel are particularly effective in performing this specialist role. The appetite for partners such as banks, brokers and technology providers to use this niche service seems clear, with the new collaboration with Samsung reinforcing its success. Customers are evidently appreciating this new way of connecting their business needs with a niche provider based on Propel’s customer satisfaction scores.

This accretive ecosystem business model works particularly well because Propel have invested in excess of £4m in its proprietary platform, Propeller, to deliver a seamless end-to-end process for the customer journey. Propel have deployed their technology to their chosen distribution partners to enable Barclays, their broker partners and Samsung’s channel to connect via API or directly to obtain access to an asset finance service that is simple, smooth and seamless.

As part of their partner model, based on the proprietary nature of their platform, Propel can tailor the application process and the specifics of the decision engine according to the needs of the partner and their customer flows.

The Propel ecosystem

Propel have been growing their business ecosystem by collaborating and partnering with several financial businesses to drive investment and support SME growth. Using the accretive ecosystem business model, Propel can help enable businesses to maximize their growth, driving productivity and performance.

The accretive ecosystem model is generally an arrangement between two, or just a few entities, where all parties have a portion of an overall customer value proposition that combined is worth substantially more than the sum of its parts. In the accretive model, the members generally don’t compete. The most common example of an accretive ecosystem is where a company has developed some sort of distinct and valuable IP and/or substantial aggregation of valuable data because of their primary business activities.

There is a realization that those assets present a monetization opportunity, but there is no appetite to invest internally to form a new business unit to create the platform and the channels to market. By selecting the right partner(s), these assets can quickly become revenue-generating without the deployment of significant capital.


Propel began to grow their ecosystem in 2020, when they partnered with Barclays Business Bank, to help SME business customers access best-in-class asset finance services to purchase equipment and vehicles.

Barclays, who do not offer direct asset finance services to their Business Banking customer base, introduce them to Propel as they are specialists in SME asset finance with slick capabilities – including their own scorecards for specific types of customers and their own tech automation and processes.

In 2021, they formed partnerships with UK accounting, tax and business advisory firm Azets and global payments service provider emerchantpay. The strategic partnership between Propel and Azets allows the latter’s business clients to access best-in-class asset finance solutions to obtain vital equipment and vehicles.

Recently in October 2022, Propel announced a landmark strategic partnership with Samsung Capital, the finance division behind Samsung Electronics (UK) Limited, to provide asset finance solutions to UK SMEs through Samsung’s extensive distribution channels.

While Samsung Capital will continue to serve the financial requirements of its larger business customers directly, they recognize that they can deliver better experience for the high volume, lower value transactions by partnering with Propel. It is these smaller value transactions where Propel will work with Samsung’s distribution partners and channel resellers to provide finance to Samsung’s channel partners’ business customers in the UK to acquire a wide range of equipment – including the latest phones, tablets and leading-edge audio-visual equipment.

These and future partnerships point to Propel’s innovative business model whereby they can partner with a financial institution like Barclays – but can equally be used by manufacturers like Samsung who have cash reserves and can finance their own large-ticket deals but need the systems that Propel have to provide finance to SMEs with more small-ticket deals.

The third distribution channel for Propel is to partner with a limited number of the largest UK brokers. The Propeller system brings efficiencies to the broker community, avoiding multiple input into disparate systems for the broker.


In August 2022, Propel announced its first private securitization, as part of a new £500 million financing round. As part of this competitive source of funding, Citi structured a £275 million private securitization facility, while Quilam Capital provided an additional £35 million mezzanine and working capital facility. This enabled the partial refinance of Propel’s existing British Business Bank ENABLE funding facility and support further growth. The British Business Bank will continue to be an important funding partner for Propel, with an ENABLE Funding facility that will allow Propel to provide c. £165 million of finance to SMEs across the UK.

The financing supports Propel’s emergence as a leading force in UK asset finance; and supports the business generated by its strategic partnerships with Barclays Business Bank, accountancy firm Azets and global technology leader Samsung Capital. This allows Propel to provide more than one million SMEs with access to fast and flexible finance to acquire equipment and vehicles.

Re-platforming Propel

During the pandemic, from 2019 to 2021, Propel decided to look at their business ecosystem and began to make changes to effectively revitalise and grow the business. In 2019 they completely re-platformed the back-office accounting system and, in 2020 to 2022, invested around £4 million in developing its in-house proprietary technology platform – Propeller. The origination software is a proprietary end-to-end system providing a seamless and swift experience for distribution partners and customers, from proposal through credit scoring to document generation and e-sig. In 2021, this was coupled with a brand-new Microsoft Dynamics CRM which sits on top of the platform.

Following this, in 2021, Propel streamlined its business origination model into three channels:

1. Partnership model – with financial partners, Barclays and Azets, who look at their customers and identify any potential needs for asset finance. They send information through their CRM system via APIs to Propeller. Typically, Propel are processing 1,500 deals a month with same-day decision. Through 500 referrals a month from Barclays, Propel are receiving fantastic end customer feedback with a 9.7 out of 10 customer satisfaction score.

2. Broker model – positioned Propeller into carefully chosen partnerships with UK asset finance brokers, where Propel can drive a similar partner approach and offer the same process. This is a growing channel for Propel, where they can embed tech through APIs into the broker front-end system.

3. Vendor model – this is the historic core of the Propel business; and is where the tech focus has emanated from. Technology vendor distributors (i.e. phones, tablets, telephony, laptops, audio-visual with an average ticket size of £7,500) have access to Propeller – embedded tech by APIs into their models. Propel are looking at repositioning traditional vendor models and embedding the tech into the customer journey. The Samsung partnership is borne out of this technology vendor channel.

Propel clients are all from business sectors and range from large corporates to micro-SMEs. Propel can offer regulated and unregulated agreements according to the profile of the customer.

Propel believes that SMEs still need to be educated about the benefits of asset finance; and provided with an awareness of being able to deploy asset finance lending against non-traditional assets. Asset finance is not just available for cars and yellow goods – but for production systems, technology assets and a whole range of fixed assets.

When asked about the credit profile of his customers Jon highlighted that all through the COVID pandemic, the cost of risk at Propel stayed consistently low and below industry average and continues to perform. The product range remains simple – either hire purchase or finance lease. Typically, HP is used for larger assets with a future value and finance leases are used for smaller deals for tech assets.

Jon believes that the business is a success due to the “combination of technology and people”. Propel are still passionate about the face-to-face client experience, but we also understand how Propeller has changed the customer journey providing an end-to end and efficient experience.

Analysis from John Rees Asset Finance Connect’s equipment finance community leader

Propeller has been a real ‘gamechanger’ in growing the Propel business, with an investment of over £4 million in developing a tech platform that makes the experience for distribution partners and customers swift and seamless.

When developing Propeller for the vendor channel, Propel realised quite quickly that they could use their tech platform to process high volume low value deals, understanding the use of tech as the core aspect of Propel’s proposition.

Barclays and other financial institutions have been quick to realise Propel’s expert capability at processing asset finance transactions, based on the combination of their tech platform and customer focused team.

With various lenders withdrawal over time from the asset finance market, SMEs have been left with inefficient and limited funding options. The Propel model allows SMEs, through Propel’s partner, broker and vendor channels, easy access to a new asset finance provider.

The Propeller tech platform enhances the partnerships within Propel’s ecosystem by being easily connected to a partner’s CRM platform via secure APIs, allowing the client direct access to Propel’s asset finance portal without any duplication – resulting in an efficient process that gives access to funds within 24 to 48 hours from start to finish.

One of the most valuable attributes that digital technology offers a business is to give it an edge over its competitors, something every equipment supplier needs in today’s crowded marketplace, and which Propel is successfully implementing through an innovative and integrated asset finance portal – Propeller. Combine that with an understanding that people are still important and customer centricity can be human as well as technology based; and Propel has a great recipe for success.

Note: Finance is subject to status. Terms and Conditions apply. Propel acts as a lender or a credit broker for business customers only.


UK asset finance

Building a new asset finance broker-customer journey   


The Asset Finance Connect Summer conference brought together various members of the asset finance community – hybrid broker funder, broker, bank-owned funder, technology provider – to discuss the future of the broker in an increasingly digital world.

As borrowers’ expectations around the customer journey change, the pace of regulation accelerates and the competitive landscape develops the future of the asset finance broker looks increasingly unpredictable in the face of three key challenges:

  • Competition
  • Regulation
  • Technology

Guidance from brokers or advisers is as essential as ever in supporting small and medium-sized businesses in the pandemic recovery period, providing their expert knowledge on products, providers and the industry as a whole.

However, post Covid lockdowns, many consumers have become more comfortable with a digital approach to finance, while many traditional firms that might look for asset financing have moved their businesses online.

Technology is progressing and apps and mobile technology can now handle everything from quoting to CRM and proposal management, at the expense of face-to-face customer service and support.

To capture online businesses looking for asset financing, brokers need to provide the experience and relationship customers expect but in a seamless, digital approach. Many brokers are therefore having to add or update their technological systems to stay compliant and competitive.

As Christian Roelofs, CEO of Finativ noted, “the broker market itself is a very fragmented market”. There are a few very large brokers with teams of people and managing directors who have time to discuss technology and strategy, but a large segment of the market is made up of smaller managed or owned businesses with limited capacity to handle future innovation and digitalisation.


For the asset finance broker, competition is less about broker-to-broker competition, as brokers have their own ‘patch’ and client base, and more on new, often technology-enabled, entrants that are coming into the market and, in particular, on digital aggregators.

Jim Higginbotham, Group CEO of Star Asset Finance, points out below that in the customer-broker-funder value chain, there are competitors who are better or worse at different parts of that value chain throughout the industry

Higginbotham points to those businesses who can combine technology with the customer interface, providing the value add in a seamless customer experience, as the real winners in the competition: “Working together in partnership with the people who best serve different parts of the value chain is going to create the best customer outcome.”

Steve Dexter, Sales Director at Clear Business Finance highlights that no one in the market is afraid of the competition as long as it is fair and equal for all, and notes that regular communication is vital to brokers in maintaining their relationship with the funder, the supplier and the end user.

Dexter argues that while digital disruptors will enter the market, they are unlikely to stand the test of time, as they will not be capable of building similar relationships. It’s a point echoed by Neil Davies, CEO, Commercial at Close Brothers who sees the broker as having the most agile response to a changing market.

The ownership of the customer is essentially the critical piece of the puzzle that needs to be understood in terms of how competition is changing, according to Katrin Herrling, CEO & Co-Founder of Funding Xchange. All sectors are thinking about their relationship to the customers and how they can serve customers better using access to the information that they have.


Brokers cite excessive red tape as one factor which is driving them out of business, although many independent brokers find that FCA regulation does deliver some benefits too.

The indirect regulation which reaches the broker and customer via banks is having an increasing impact on the broker and the funder-broker relationship, as opposed to direct regulation on the broker themselves. And as recent discussions on commission disclosure have demonstrated, brokers lack a voice when it comes to the creation and application of regulation.

The recent publication of the new Consumer Duty rules and guidelines will undoubtedly have an impact on brokers with implications for fees, commission disclosure and quantum of commission. The new Consumer Duty principle will expect all members of the value chain to take responsibility for achieving good outcomes for customers. Any lack of clarity about the value that brokers deliver to their customer is likely to attract increased scrutiny.

From Davies’ perspective as a lender, there will be increasing pressure to question whether the broker is sufficiently looking after the customer and providing a good customer outcome, and whether they helped to identify a vulnerable customer.

In his experience, Higginbotham believes that “delivering regulation properly is a partnership piece,” where having a genuine partnership with people in the value chain who align their approach to create a good customer outcome can only be a positive because “if any part of the process breaks down and doesn’t create a good customer outcome, everyone’s a loser”.

From Dexter’s perspective as a broker, regulations are there to protect the customer, which can only be a positive for businesses. However, when there is a supplier in the chain it becomes more complicated because often it is the supplier that is dealing with the customer. So, brokers have to make sure that the supplier understands what their commitments are and what they should be doing with the customer. Brokers should therefore be more involved in the introduction of new regulation and their impact on brokers.

Higginbotham from a hybrid-broker-funder perspective, sees the principle-based Consumer Duty as a positive for the longevity of asset finance business due to the focus on good outcomes for customers.

However, the challenge comes from distinguishing where the responsibility and the principal lies if things go wrong. Higginbotham has noticed a definite trend in relationships with funders where a lot of the financial pain for non-compliance is being passed through trading agreements back to the broker and notes “While you can’t abdicate responsibility, you can offset it through an indemnity clause.”

“Delivering regulation properly is a partnership piece.”

Jim Higginbotham, Group CEO, Star Asset Finance

Herrling does not want asset finance to be an industry “where we compete based on whether we’re compliant or not…a key principle has to be that we as an industry need to find a way that we can demonstrate we’re compliant, and not try and out compete each other by skirting around the edges.”

Herrling demonstrates that at Funding Xchange, “the way we operated from day one is that for every single customer who comes to us, we have a trail of evidence of how they’ve been treated, what offers they’ve been shown how they’ve interacted with us, who they’ve progressed with us what’s been the outcome. And that trail of evidence of interactions is providing the backbone of how we can demonstrate that we’re treating every single customer actually fairly, and fulfilling our customer duty.”

Herrling sees that this use of technology helps to remove barriers, enabling brokers to stay compliant and fulfil their customer relationship duties.


For brokers looking to stand out in the market, it will become increasingly important to adopt a digital solution that adds value across the entire asset finance lifecycle and facilitates a frictionless customer journey on a single tech platform.

The motor finance industry has been working with an enabled and efficient platform connecting brokers and lenders via API for the past 20 years, so why are asset finance brokers not following suit and investing in technology?

In asset finance, many brokers are much more comfortable sending a proposal to their customer contact, rather than going into a digital broker portal and sending something through the portal and then waiting for an outcome.

In addition to the lack of investment by brokers themselves into new digital platforms, there is also a lack of consistency between lenders of what they want brokers to supply, with brokers are left to key in an application into multiple forms that are all slightly different for each of the lenders they work with.

“Technology is not going to replace the broker in terms of customer engagement and relationships.”

Katrin Herrling, CEO & Co-Founder, Funding Xchange

Technology is not going to replace the broker in terms of customer engagement and relationships. It will, however, as Herrling notes, be there as a problem-solving tool to assess a proposal and data: “Technology has to be very, very clear about the problem they’re solving, which is reducing the time it takes to assess a proposal that comes in from a book or on a different channel.”

As a broker, Clear Business Finance’s Dexter has considered using a digital solution for delivering a service, but not to manage the regulatory burden. Dexter confesses that his view on technology is that, “as a broker, you ignore at your peril”.

However, as the next generation of business owners will be technologically proficient, brokers need to invest now to update and develop digital platforms. To provide a complete customer experience, the technology and the speed is needed to provide quick and slick customer service and a good relationship.

Star Asset Finance’s Higginbotham sees the technology solution as part of an end-to-end solution with built-in compliance creating an evidence trail automatically. Herrling agrees that a self-serve solution only works for very simplistic deals and won’t serve the customer, or the funder, in the right way. For brokers who are using technology, the digital platform can support the advisory services that they provide to their clients and can evidence that they have viewed different funders and have made a decision about which funders are suitable for their customers.

Is there a future for brokers?

The UK’s changing asset finance and regulatory landscape has presented a number of challenges for growth for brokers, as well as the tools and processes they can adapt and use to succeed. Unfortunately, the falling number of brokers across the UK is resulting in the loss of face-to-face customer support and specialist knowledge and experience.

The customer engagement and relationship which is key to the role of the broker is vital for the industry going forward. However, technology will become just as important in the modern broker’s day-to-day role to increase customer conversion, retention and profitability. Not only can digital tools help manage the repetitive manual work, but they can also manage the sales, compliance and governance processes, making brokers more compliant and data driven.

Brokers will need to adopt a seamless customer journey on a digital platform to stay ahead in the asset finance market and to remain compliant and competitive.

Analysis from Stephen Bassett Asset Finance Connect community head for asset finance

The debate around these elements; competition; regulation and the application of technology is not going to stop anytime soon. In my simplistic mind, until our customers all become robots, there will always be a place for human interaction; taking an interest, understanding the issues, building trust over time, answering questions, clearing up misunderstandings, providing appropriate solutions, caring etc., are all things that automated systems tend to struggle with. Most people like to work with other people, not machines, so of course there is always a place for intermediaries, like brokers, whose specialized skills enable them to help their customers fulfil their particular needs in a more timely and less resource hungry manner.

As in most other sectors, competition is a healthy thing, it tends to keep prices on the straight and narrow and it sparks innovation. When combined with the sensible use of emerging technologies to speed up processes and keep costs down, it keeps the incumbent players on their toes, defending ‘their’ territory from new approaches, and sometimes it forces them to adapt.

The element that concerns me most in this discussion, is the regulatory piece. Some regulation is clearly necessary in order to prevent excesses and ensure fairness, but I do wonder if constantly trying to adapt the existing rules to deal with yet more symptoms arising from new and sometimes inappropriate or unfair products, unreasonable costs and poor selling methods, is really the most sensible approach.

The somewhat tenuous lines drawn between what is seen as Consumer or Retail, or Business or Corporate, confuse things even further, would the same general set of ethics not apply in each area?

We seem to be building an edifice which continually adds new risks and sometimes unintended consequences for providers and also layers of significant extra costs, all of which in the end have to be paid for by the customers they are there to protect. At the same time, the options available to those same customers are beginning to decrease and the numbers of suppliers of potential support are seemingly shrinking. However, I suppose that is a much wider debate.

In the meantime, anything that technology can do to ease the burden of ensuring and evidencing compliance, due diligence and fairness, in both the regulated and unregulated arenas, has got to be a good thing, but it does need to be cost effective. There are still niches for manual systems and growing spaces for automation. In my view, those who can create the slickest combination of computer and human interfaces will have the competitive edge.


UK asset finance

Approaching the Arena anniversary: fixing the gap in UK asset finance fraud data    


Over 220 delegates attended the exclusive Asset Finance Connect Fraud webcast, sponsored by Acquis Data Services, reinforcing the fact that the topic of fraud in asset finance is still very much alive and relevant, and needs action now from the industry. 

The Arena fraud scandal 

Ten months on from the Arena Television revelations – “one of the biggest frauds in UK asset finance” – which exposed a massive hole in the collective asset finance industry, what lessons have been learnt? 

Fraudulent activity at Arena had been happening for more than a decade but was only exposed in November 2021, with over 50 leasing companies impacted and total losses valued at over £280bn.  

As AFC asset finance community leader Stephen Bassett puts it, “The financial services sector is under attack by fraud.” The Arena fraud was not a unique event for the asset finance industry, with fraud involving multiple companies unquestionably occurring every five years or so for ever increasing amounts. 

“The financial sector is under attack from fraudsters and it is now time to defend ourselves.”  


All panellists agreed that the whole industry ecosystem must be aware and engaged in the topic, with closer co-operation and communication – sharing data and experience – needed, but this is not the whole solution. 

The continuing fraud phenomenon must be addressed now with barriers put up to stop fraudsters impacting the asset finance market. 

Actions taken 

After Arena, the Finance & Leasing Association (FLA) took part in workshops with Acquis looking at different ways of sharing and analysing data. 

The FLA’s Simon Goldie, Director of Business Finance & Advocacy, confirmed that the FLA are looking at three broad work streams: 

  • Working with Acquis – what do members think about the Lumia product, how could it be explored? 
  • Working with Experian – looking at how the company shows data and how lenders could spot the problem earlier. 
  • Working with all credit reference agencies (CRA) – how data is shared amongst them, how do members provide that data? 

The FLA also issued best practice on fraud mitigation, with a focus on sharing, providing and using data; asset inspections; and communicating with brokers. Physical asset registers were also considered but FLA members did not see them working effectively and, realistically, they wouldn’t have stopped Arena. However, they could be part of a mosaic to combat the problem. 

Bassett highlighted that the lack of shared data and information during Arena was a major issue in the scandal: “Each finance company had no idea how much was being funded by other funders…and that is the root of the problem.”  

“Credit bureaus are only as good as the data they receive from the asset finance funders.”  


Steve Budd, Chief Operating Officer and MLRO at Investec Asset Finance Plc feels that the industry must supply accurate data to the credit bureaus who must, in turn, report it to their users of the service: “Credit bureaus are only as good as the data they receive from the asset finance funders.”  

As Budd continued, “Until such a time where all funders provide correct data to the credit bureaus and the credit bureaus consume and share that data, we are to a large extent sailing blind.” 

Following Arena, Nick Leader, CEO of Acquis Data Services received calls from his customers asking him to be involved in  trying to solve the fraud issue in the asset finance industry as Acquis already receives substantial amounts of data from many players in the market. 

Acquis set up workshops with the CRAs and the FLA to discuss how this had happened and how fraud could be stopped. As Leader notes, “We tried to bring the industry together to design the solution themselves.” A working party was created to design an effective accurate solution and address any concerns, such as data in data out, GDPR, marketing leakage and data storage. 

Acquis Data Services was created to purely address this issue and has since built a potential solution for the industry – Acquis Lumia – a register of asset finance borrowing which will provide a clear view of a company’s current asset finance arrangements to empower confident lending decisions. Acquis Lumia currently has 35 Expressions of Interest signed to date (including seven of the top ten UK asset finance companies). The system is live but will not be released until there is sufficient scale of data on the system. 

“We tried to bring the industry together to design the solution themselves.” 


The way forward

John Phillipou, Managing Director of SME Lending at Paragon Bank plc pointed out that there are so many proposals on the table that “we are at risk of doing nothing the longer it goes on – we need to stop and reach a solution now!” 

Phillipou noted that it is possible to find an effective solution quickly, citing a recent fraud case in Germany which was dealt with relatively swiftly and efficiently by the relevant trade association linked with a private company who formed a collaborative asset data checking tool to stop future fraud, all within six months. 

A delegate at the webcast also raised the point that, in Germany, the BDL (the Federal Association of German Leasing Companies) brought together major lessors to sort out issues of fraud and, therefore, in the absence of any government regulation, should the FLA step in? 

Simon Goldie highlighted that the FLA is driven by its members who urgently need an effective solution. The FLA will continue to work with Experian and Acquis, but if neither get the required market share or share data between themselves, they will return to their members for further clarity. 

Steve Budd believes that the solution does not lie with the CRAs due to a historic issue where it will take too long for them to engage with all funders to protect the data that is being fed into them. Budd pointed out that Investec reported all 10 Arena loans to their credit bureau who, in turn, only reported five of them, highlighting a major problem with the credit bureaus. 

There is also no co-operation between the credit bureaus as they all strive to gain market share. A credit bureau would need a larger portion of the market data to allow them to be a single data source. CRAs need to collaborate or one must have a data point of 60-70% market share for them to be an effective solution to the issue of fraud. 

In this respect, Leader highlighted that Lumia is not reliant on winning market share, with data collected in a narrow direct way. Acquis Lumia will not charge for its services until it has an adequate market share. 

To conclude, AFC’s Bassett painted a picture of the asset finance industry forming an indestructible circle with their ‘wagons’ to stop the fraudsters getting in. Anyone outside the circle will therefore be isolated and targeted, but these outsiders will also weaken everybody else’s defences. Bassett stressed the point that the industry must stop talking and work to find a solution for fraud now before another Arena is revealed. 

Analysis from John Rees head of Asset Finance Connect equipment finance community

There was a clear consensus among the expert panel including the FLA representative that a quick efficient solution was needed in the short term.  Already 10 months has passed from the discovery of Arena and, so far, there has been lots of talking but only limited definitive action.  

The Acquis Lumia product brings the quick efficient solution but there seems to be some residual concerns about finance companies sharing data through a third-party company and potential marketing leakage.  This issue needs to be discussed openly and addressed collectively or we will be at a standstill and the fraudsters will see our industry as ripe for attack.     

The industry needs to get comfortable with the Acquis Lumia product quickly or find a different solution or we risk seeing another large-scale fraud whilst the industry prevaricates about the right solution. 

Looking at poll results – 83% agree that the cost of preventing fraud is less than dealing with the effects of fraud and 57% feel that we need to improve data collection and supply – it is clear that people feel this is missing – so collaborate and act now before we have another Arena on our hands! 

Its time for action! 


UK asset finance

Taking aim at fraud


There is no “silver bullet” to stopping fraud within the asset finance sector – but collectively there is a great deal the industry can and must do to reduce the occurrence and the impact of fraudulent activity. That was the message from a recent Asset Finance Connect Unconference, which identified greater collaboration and better use of data as the key challenges.

The event, sponsored by global asset and auto finance technology specialist Alfa, brought together a broad range of participants from the lending, risk, regulatory and legal communities to reflect on how the asset finance industry should be addressing growing fraud risks.

Recent media coverage of developments at Arena TV may have pushed asset finance fraud into the spotlight, but it is by no means a new phenomenon. Back in the 1990s, the €2bn FlowTex fraud rocked the German market, and there have been several high profile cases since. What’s changed is the increasing digitisation within the sector, which has both increased opportunities for fraud and provided the data sources needed to combat potential abuses.

Vital data

The trade association has carried out work to identify how to move forward, given GDPR and other regulatory constraints, and share information effectively.

It is, as Simon Goldie, head of asset finance at the Finance & Leasing Association (FLA) explained, “an information data problem. It’s about sharing the right information and data, and then how you analyse it and how you understand it.” The trade association has carried out work to identify how to move forward, given GDPR and other regulatory constraints, and share information effectively.

“We think the solution is potentially around existing products or services, but they may need to change. Or we may need something new.”

Simon Goldie, head of asset finance, FLA

Good governance

Company culture also plays a part. As Roger Potgieter, partner in the Shoosmith finance services disputes and investigations team, pointed out, while lenders often have an established and very public way of congratulating the salesforce for bringing in new business, there is sometimes less of a focus on monitoring the progress of a contract. “How much importance does your business place on what happens on the back end on fraud, protection, fraud detection, and doing something about it when you are a victim of fraud?” Potgieter challenged. Fraud has never and will never go away, but the industry’s level of preparedness is critical.

“That’s one of the features of the equipment finance and leasing industry in that it does tend to be a make it, sell it, forget it product. You buy the equipment, you sign the lease agreement, you collect the rentals. And then it’s three years, five years and very little happens, unless you’re in a technology lead sector where there’s a tech refresh or upsell or upgrade opportunity.”


What do you do about ongoing monitoring? How do you alert yourself to possible changes in financial circumstances or new directors coming to that business? Because when we talk about one of the frauds, what we’re talking about is company hijack, we have a perfectly good business that is infiltrated by fraudsters.

Quote from participant

Lessons learned

Martin Hofmann, chief risk officer at GEFA Bank, outlined developments in Germany post-the FloTex scandal, which include the creation of an asset register routinely used by around 90% of the industry to provided what he termed a “plausibility check” on transactions. The register includes serial numbers as well as additional data which allows lenders, for example, to check consistency by showing that the serial number recorded against a particular item does match the manufacturer’s usual serial number for that category of equipment. “From our own perspective, I can say that around 75% of potential fraud cases could be prevented in the past,” Hofmann noted.

“The in-life audits they don’t always have to be physical touching metal – with the technology of today you can do that digitally using online diagnostic tools that tracks assets.

“Can you get ahead of a problem? At the height of the pandemic like a lot of finance businesses, we restructured a large portion of our portfolio with proactive reaching out to the customer to support them, and that was a great opportunity to make sure things are okay. And is equipment secure? Are there any issues? That means using those touch points to keep monitoring progress.”

Quote from participant

But as John Phillipou, Paragon Bank managing director of SME lending, explained, many in the asset finance sector now find themselves “tied in a Gordian knot”, partly because of regulatory constraints and also because of the competitive nature of business, which means data sharing is not as comprehensive as is required. This was illustrated in the case of Arena TV, because as soon as different lenders gathered together on site post the company’s collapse, the inconsistencies quickly became apparent.

Additionally, Phillipou pointed out that many lenders are now being challenged to do deals from cradle to grave in three to four hours, and that pace of operations opens the door to fraud.

Future options

There was widespread agreement that the most obvious route for the asset finance sector to take to tackle fraud more vigorously was the establishment of a centralised database of asset details and customer and lender information. But while the solution appears simple, the implementation is likely to be much more complex, and will only work effectively if there is universal agreement to provide the necessary data. That requires strong leadership of any such project.

It also calls for conversations with the credit ratings agencies, who may be reluctant to share what is for them competitive information about businesses they score. But the overall concensus was of a pressing need to act now, with doing nothing not an option.

of the bigger lenders leading the way joining a consistent approach of a database or wherever it is. How we make it work, I don’t know, maybe it’s an extension of a HPI, or one of the other ones that been talked about. So assets are registered, and we all know that this asset exists or doesn’t.”

Quote from participant

“The elephant in the room is number one, that no one wants to go first. Everyone’s waiting for someone else to solve the problem. And the second piece is, that people are looking for a silver bullet, and we’ve said there isn’t one..”


Stopping fraud in its tracks

Roger Potgieter, partner in the Shoosmith finance services disputes and investigations team, outlines good practice for preventative measures:

Know your customer: Find and verify data on individuals, the business and its directors, both at the start of the contract and as an ongoing process. A fraud may not necessarily start as a fraud, but changing circumstances may see individuals seek to exploit loopholes.

Verify title: When purchasing an asset, verify the title and the background of the seller. as without title, there is no security. There need to be checks in place at the outset to understand and make sure you are obtaining good title to the asset.

Check the price paid: Verify the value of the asset before you fund it. A mis-described or overvalued asset can leave you open to fraud with a greater exposure should things go wrong.

Know your suppliers: Run similar checks on the suppliers you are dealing with to those applied to the end customer. Establish a process for what the expectations for each supplier will be if something goes wrong – will you be looking for recovery from them? Beware that some fraud does involved collusion with suppliers.

Inspect assets: Assets need to be checked, not only at the outset to ensure that the asset you are funding exists, but also as part of ongoing audits. Is that asset being used as intended, and in the expected location?

Identify assets: Labelling and plating of assets ensure equipment is not substituted. Within your business, would this work for you as an effective fraud prevention measure? And do you have the expertise that you require to deal with it? What data do you need to share with others?

Learning from your mistakes

Stephen Bassett, head of the IAFN asset finance community, looks at the role of governance and training in combatting fraud.

The most effective baseline step in preventing frauds against your organization, is simply to ensure that staff at all levels are continually reminded of how frauds tend to be perpetrated and to understand that when a fraud is successful, it threatens not just profitability and bonuses, but also jobs and sometimes even companies.

So what do you think staff have to do, to help protect both their employer and themselves? Firstly, they must not assume that any information or request they are presented with is genuine, even if it has been handed over internally. Whether it is a bank statement, a set of accounts, or a request to change a suppliers bank details, the mantra should always be, ‘…is this real?… The next question is, what could this lead to and how can I validate things? Most of the attempted frauds I have seen have been prevented as a result of staff simply using their commonsense and following through on any doubts arising.

In contrast, nearly all the successful frauds I have seen, have been as a result of someone in the process simply failing to carry their piece out effectively: by just box ticking, believing what they have seen, or been told, without any really effective double checking; ignoring or simply not seeing the warning signs; or waiving normal protocols under perceived time or target pressures.

Everyone needs to fully understand why the rules exist, and to make sure they are followed by everyone and to tighten them up when those measures look too weak.

Falsified or cloned accounts can get filed at Companies House, bank statements and ID documents can be forged. E-mails and attachments can be intercepted, while accounts can be doctored and company ID cloned. Staff really must be made aware and ever reminded, that they and their employers are actively targeted by fraudsters.

Finance companies are seen as low hanging fruit, ripe for the picking. One simple call to get some bank details changed could reap a fraudster tens of thousands of pounds, so why would they not give it a try? Fraudsters have even been known to buy reputable companies outright in order to go on a fraudulent shopping spree and once the equipment is delivered it simply disappears.

Clearly, some people will go to great lengths to get their hands on your company’s money or your equipment, but if you have been duped, don’t just blame the fraudster; you could almost certainly have avoided it, so analyze the detail of what happened to provide training material. Then once you know what went wrong make sure staff get to see how they can all be better focused on preventative measures and why protocols need to be tightened up and properly followed.

“You need barriers up around your company to protect you from fraud, and you need barriers up around the industry to protect you from fraud. But if your staff don’t know what things they’re supposed to be protecting you from, or don’t feel that if they miss a step out, it doesn’t hit home, it all starts to go wrong.”

Quote from participant

Analysis from John Rees head of Asset Finance Connect equipment finance community

Asset finance fraud may have hit the headlines recently, but it’s a problem that has been troubling the sector for years and there is no simple solution which will magically make it go away. That was the universal view of our webinar participants when discussing the issues thrown up by recent events, but discussions also highlighted a real willingness to collaborate across the industry in order to find better approaches.

Doing something about reducing the risk of fraud requires a combination of actions, including improvements in training, governance and culture, as well as coordinated collaboration across the sector to systematically collect data that can be used to identify fraud cheaply and efficiently, and the deployment of appropriate technology to use that data to enable better and faster fraud identification.

As one of our speakers, Shoosmith’s Roger Potgieter pointed out, the immediate requirement is for some self help. Lenders and others in the asset finance sector need to think about how to make themselves a less attractive target for fraudsters, employing a healthy dose of business scepticism alongside strong internal checks and balances which are regularly used and reviewed. No one wants to be the weakest link, and there is also no room for complacency – controls need to be applied rigorously.

But no lender or broker operates in isolation, and one of the critical challenges identified during our discussions was the urgent need for cross-industry collaboration. An improved or better used asset register would prevent the unscrupulous from seeking finance from multiple funders for the same piece of kit, since it would be easier to check serial numbers, while a database which brings together all credit outstandings of an individual borrower would help lenders spot companies which are over-extended. It would function as a “plausibility check” as Martin Hofmann, chief risk officer at GEFA Bank, outlined has proved is the case previously discovered in Germany.

Our participants acknowledged the advantages of improved databases, since there is no one database at present which records all the borrowing from the asset finance industry. But there remain substantial hurdles to overcome, not least in terms of securing agreement from all the major players. Sharing data is key, and that means lenders, brokers and asset finance users all need to be onboard. There are also concerns that regulatory requirements, such as the GDPR, could put a brake on progress with this.

However, the discovery that some 55 lenders have been caught up in the long-term fraud at Arena TV is potentially the wake-up call the industry has been waiting for. We heard during the webinar that some of the lenders had no idea that others were involved until they met on site in the immediate aftermath of the outside broadcaster’s collapse.

Innovative technology, particularly onboard telemetry and Internet of Things, can help funders to better track and manage assets. But to effect real change in how the industry tackles fraud requires all those involved to cooperate and improve databases, so that every asset is recorded and monitored. Arena TV has proved the catalyst for the asset finance sector to start making changes.

At AFC our aim is to help the industry create communities and working groups that can bring together ideas and solution for everyone.