The RMIF has talked to a Treasury minister about its plans to form a car dealer bank in partnership with an existing financial institution.
Paul Williams, RMIF chairman, has told Angela Eagle, exchequer secretary to the Treasury, that his members want to have some control over funds available to lend to car buyers.
“We are feeling our way around Westminister with this idea,” Williams said. “It is a serious intention, and part of our determination to get some action moving for the retail motor industry.
“We don’t have a particular bank in mind – our partner might be a high street or commercial bank. The RMIF has already had a response from some banks but I can give no details at this stage.”
Williams said many members were expressing growing concerns about the inability of banks to extend credit.
As banking was not a core competence at the RMIF, he and other executives decided a partnership with a bank was the answer.
Rob Foulston, RMIF chief executive, said although credit was available to dealers, an additional resource could only be of benefit to the industry.
The idea has met with a frosty reaction from the Finance & Leasing Association director general, Stephen Sklaroff, who said: “The market is already served by a significant number of captive and independent motor finance houses.
“Current difficulties in the wholesale funding markets are affecting many lenders of all kinds, and would affect any new players in a genuinely competitive market.
“The FLA is therefore concentrating its efforts on ensuring, through active discussions with the Government, that existing motor lenders have access to appropriate support in order to continue to serve their dealer customers.”
Graham Filmer, an automotive sector independent finance and insurance consultant, said: “A dealer bank would add gravitas to the RMIF and could enable its members to have more control over lines of credit.
“But it would depend on how it was set up. For the RMIF to have control, it would probably need to put the finances of the bank on its books. If it had a minority stake, avoiding that, then its degree of control would be debatable.”