Well known industry figure Roger Gewolb, formerly of Park Motor Finance, has announced a raft of new projects to Motor Finance, including political work to reform the UK subprime credit market.

Following previous advisory assignments for the Bank of England and the Treasury, Gewolb says he is working with parliamentarians to develop new finance and business initiatives, with what he calls “a bit of a social enterprise twist”, with a view to reforming UK subprime credit.

In terms of his ambitions in the motor finance market itself, the Chicago native told Motor Financethat potential investors he had met with were either hampered by unrealistic profit and timescale expectations, or unnecessarily worried about subprime business.

“There’s still a lot of unjustified fear attached to the subprime word due to the mortgage industry,” he speculated. “UK subprime car finance is the baby that shouldn’t have been thrown out with the mortgage bathwater.

“Of the few businesses that do still reach into subprime, most appear to be performing well; even the running down portfolios of the many players which had their funding curtailed seem to be performing well.”

Rollover

Gewolb is particularly concerned that old and new subprime customers may be driven to extremely high interest payday and internet loan providers while the gap in the market persists.

“There is still no clear solution to the extreme exploitation of the financial underclass by lenders charging rates in the 1000s of percent”, he said. “More and more borrowers fall off this cliff, into the arms of finance they can possibly never repay, with almost all of the finance companies that could help being still cut off from funding.

“I mentioned all of this to one earnest and concerned parliamentarian, who reassured me, based on what the short term loan providers had come to tell him, that this lending comprised terms so short as to make light of the punitive interest rates involved. I asked him what rollover rates the lenders he had spoken to were running, and he stopped dead in his tracks: ‘what’s a rollover rate?’ he asked.”

DATED: 18.03.12

FEED: MF

# posted by Profit Training Ltd : 8:31 pm