Latest move by Siemens Financial
Services reminiscent of Haydock Finance.
Go deeper with GlobalData
An arm of Siemens Financial Services (SFS) UK
has broken with the long-standing tradition of selling assets to
brokers once they have come off lease, Leasing Life has
learned.
Broadcastle, SFS UK’s small-ticket lender, has
bypassed brokers in a number of deals and sought to sell assets
directly to customers.
Normally, lessors issue at lease end a
Purchase Upon Termination (PUT) option in which the asset is sold
for a nominal sum to a broker, which in turn is then free to
dispose of it as it saw fit.
Several brokers with long-standing links to
SFS have been affected by the change, and they said they expect to
suffer sizeable losses as a result of the move. Although the value
of each deal is only worth around £500 (€573) or less, in total
they could amount to several million pounds.
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By GlobalDataSFS declined to comment on whether only
Broadcastle, which recently stopped signing new business, has
become subject to the new practices.
A spokesperson said: “Siemens Financial
Services Ltd in the UK does not comment on individual trading
arrangements they have with vendors or brokers, and as each
relationship is influenced by a wide range of factors it would be
inappropriate for SFS to make a general comment.”
Siemens Motor Contracts, as well as Siemens
Bellevue Finance Ltd, a funfair equipment leasing business, have
also closed to new business in recent months.
Many lessors that have cut broker funding
lines, including Universal Leasing, GE Capital and Bank of
Scotland, are continuing end-of-lease procedures with former
introducers as usual, it is understood.
One broker said: “SFS has broken our trust and
confidence built up over more 17 years as an approved broker, with
total disregard for the impact their actions have on our business,
our staff, our customers and the asset finance industry.”
Customers are also said to be “confused and
angry” at the move, particularly as Broadcastle, rather than
offering secondary rental options and rental rebates, is instead
“requesting equipment be returned to them if the customer does not
pay the purchase price offered”.
One commentator said a lessor is completely
within its rights to withdraw a PUT option on an introduced deal,
but to do so puts a strain on both the broker’s income and its
relationship with the customer, who expects its lease end option to
conform to initial expectations.
Wyse Leasing founder Jeremy Hall said:
“Lessors with broker trading agreements containing clauses relating
to title invoices and secondary rentals have been very fair in the
past, even when they stop trading with the brokers in question.
“Clearly there are benefits to lessors for
honouring secondary rental splits, but in the next couple of years
they will be essential for brokers, providing some form of
realistic income.”
Several years ago, brokers formed an action
group after Haydock Finance terminated secondary rental splits and
title invoices to its brokers.
Hall said: “Being personally affected, I spoke
to Haydock. ‘We have lost so much money on our broker portfolio,’
they said, ‘and this at least is a way of reducing some of those
losses’.”
David Mogg, director of First Capital Finance
Ltd, said SFS was capitalising on its decision to withdraw from the
broker market by “leveraging additional income from the lease
agreements it has on its book”.
Mogg added: “It is, however, disappointing to
see this action being taken. It would appear to be to the
customers’ detriment regardless of its impact on the originating
broker and possibly the originating supplier.
“It can surely only have a short term income
benefit to the lessor concerned.”
Fred Crawley.
