Fleet funding: product selection

The high wire that professional fleet managers walk is stretched tight.

At one end is the need to provide the company with effective mobility, HR compliance and benefits; at the other is a need for protection through the right funding options, insurance cover and other financial services – at a competitive cost.

It is the latter which is stimulating debate about whether fleet managers need to better understand the ins and outs of financial services as well as having to decipher whether products represent value for money, are legal requirements, or just plain superficial.

Julie Jenner, chairman of fleet operators’ organisation ACFO, believes that fleet managers must be able to make informed decisions to run their fleets effectively.

She says: “A broad overview of products is essential.”

Products on offer range from the standard insurance portfolio types such as personal liability and credit hire through to more innovative ones such as gap insurance and fleet indemnity cover.

While a broad understanding of what financial services products are all about is no doubt an asset, the provision of accurate and meaningful management information on which to base buying decisions is a key factor.

Penny Stoolman, of accident management specialists Total Accident Management, says: “By having the right tools in place, people in my position are able to fully brief fleet managers and help ensure that what they are purchasing is right for their business.”

The sheer number of products on offer is bewildering but fleet managers don’t need to possess an in-depth knowledge of financial services as there are other routes to market.

One of the answers lies in the size of fleet being managed.

Never short on innovation, the estimated 3,000 brokers in the UK are a potential source of help, particularly for those operating in the small and medium enterprise market.

This is especially pertinent when considering that 57% of the country’s 3.4 million fleet cars are part of fleets of less than 100 vehicles.

Developing an effective partnership with a financial services provider is paramount to ensuring the right products are purchased, according to Emmanuel Lewis, fleet manager for Vista Retail Support.

He says: “Most fleet managers are aware of what is out there and by ensuring they are up to date on all relevant issues, they can be confident that what they are being sold is right for their needs.”

Independent fleet consultant Colin Tourick suggests a thorough understanding of the business is essential where there may be a dearth of financial services knowledge.

He comments: “A simple idea of how various products fit together and how they might benefit the company further downstream would give an indication of whether a product is suitable or not.”
For those plying such products though, a level of knowledge on the part of fleet managers would undoubtedly make their jobs easier.

So thinks Tony Saunders of Turnamms, uninsured loss recovery specialists. “The lack of expertise can leave companies vulnerable with third party providers such as brokers being relied upon to supply relevant and effective solutions for a company’s needs when they might not have the full picture,” he says.

A further factor for consideration concerns those running larger fleets who may deal with all elements themselves. In these situations, individuals need to either rely on their own knowledge, which may be limited, or ensure that they employ internal, expert knowledge.

Graham Lesslie, of Gofor-Finance, a provider of financial solutions for the fleet industry, says: “Fleet managers in this position are being asked to be financial experts as well as having an understanding of a number of other commercial areas.

"In this case, they must be empowered to make the right decisions but only after ensuring they understand the ins and outs of the products they are buying.”

The financial services market has been heavily regulated by the FSA since changes came into force three years ago.

This fact alone is not enough for fleet managers to rely upon when making financial purchasing decisions.

It merely underlines the need to have a reliable and consistent source of advice given the complexity of products on offer.

Either that or fleet managers become self-educated financial experts in an ever-evolving world.

Fact and fiction

It can be difficult to separate fact from fiction when it comes to choosing the right financial product.

A range of self-help tools can provide impartial advice and help:

Managing Your Company Cars by Colin Tourick provides a useful insight into not just managing fleets but what financial products might be best suited to your organisation.

www.icfm.com – the Institute of Car Fleet Management provides training, advice and support for anyone involved in fleet management and runs finance based courses and workshops.

www.abi.org.uk – the Association of British Insurers can supply impartial advice to those seeking to purchase financial type products.

www.avfb.co.uk – the Association of Vehicle Finance Brokers aims to agree standards and a code of practice in respect of vehicle finance brokerage.

www.acfo.org – leading organisation representing and supporting the needs of all fleet operators where information on a range of topics can be viewed.

www.autoindustry.co.uk – maintained by the Department for Business, Enterprise and Regulatory Reform, the website provides details of all aspects of the fleet sector.

www.bvrla.co.uk – site of the British Vehicle Rental and Leasing Association contains a wide range of information and publications.

www.amassociation.co.uk – with 35 full members estimated to account for about 70% of the credit hire/credit repair market in the UK, this website provides a useful insight into a growing product phenomenon.

www.gisc.co.uk – provides a gateway to a range of regulatory websites and providers of financial services.