After falling out of favor following the 2007 economic downturn, U.K. non-prime consumer specialist lenders have rebounded strongly over the last few years. However, with its checkered history, some are legitimately questioning whether the industry is once again growing beyond its means and how companies and investors can mitigate the risks of participation.
In this Executive Insights, L.E.K.'s Ashish Khanna and Peter Ward explain how the specialist lending market has changed dramatically since the onset of the crisis, and reveal why they believe the sector is sustainable – provided participants and investors maintain a measured approach.
Specialist lenders and their investors can make attractive returns in this market, but only with the right approach, systems, discipline and knowledge in place. L.E.K. considers the following ingredients integral to specialist lending success:
1. Treat customers well and fairly
2. Maintain underwriting discipline
3. Develop a deep understanding of customers’ needs
4. Work pro-actively with the regulator
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