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Sub-prime lending ‘is place to be’

The Funding Corporation, launched by former Capital Bank Motor executives in 2001 to challenge major finance suppliers, has ceased to operate in several sectors and is focusing on sub prime lending.

Its Approved Car Finance division operates from eight branches and online, selling cars mainly two to four-years-old. On September 1 ACF moves into Scotland, opening an outlet at Livingston just off the M8 between Edinburgh and Glasgow.

Its existing branches are at Maidstone, Isleworth (close to the M25), Birmingham, Bristol, Mansfield, Leeds, Manchester and Dunstable, near Luton.

Managing director Jim Rowley, Capital Bank Motor general manager at the time, led the formation of The Funding Corporation.

“We are convinced that sub prime is the place to be because the Financial Services Authority’s legislation has made the sector extremely challenging,” he says. “This is a growing market. We receive 10,000 loan applications a month, giving approval to around 1,000.

“The prime lenders are tightening their credit checks and more people are being turned down than approved. It’s an enormous problem and prime lending is becoming a niche sector.”

The Funding Corporation has stopped providing unsecured loans for cars because it is such a difficult segment. The company has not disclosed turnover or profit/loss since August 2005. Then, it announced a £5 million operating profit in calendar year 2004.

Rowley says: “It would not be appropriate to announce our profit or turnover because not all the figures are available. But we are doing much better this year than in 2006.” The Funding Corporation is also providing non-automotive secured loans and second mortgages. It has a number of ‘affinity’ contracts, and operates Asda’s secured loans programme.

David Titmuss, a Funding Corporation founder from Capital Motor, has left to join another specialist sub prime loan provider. Recruits include head of marketing Howard Ormesher from Cheshire Building Society.

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