Throwing Away the Compass
Compass Finance reported today and three things from its results strike me as odd or questionable.
The first thing is, it reported turnover down from £14.3million to £12.9million and said “The Secured Loans market saw a significant downturn as a combination of higher interest rates and nervousness surrounding house price inflation resulted in a stalling effect”.
Now this strikes me as strange because not one other listed Secured Loans Company has reported a downturn. If we look at their last reports, we see Debts.co.uk reporting an impressive increase in sales and, although they don’t isolate the Secured Loans segment, they also don’t report market problems. We see Debtmatters, although only recently gaining its Secured Loans presence through the acquisition of Loanmakers, reporting no problems and Elephant, who haven’t reported since June, but in October still had the market confidence to refer to themselves as a “fast growing packager of loans”.
The second thing that strikes me as concerning is that Compass says “Following the acquisition of Budsworth & Co, the strategic business model for the Group is now complete, a great step forward for the business. The addition of IVA as a debt solution to sit at the forefront of our product range”.
The striking word here is “forefront”. If we look at the segmental analysis we see that IVAs currently make up 2.5% of sales, so it strikes me as odd that, presumably, Compass will put more resource into growing its IVA business rather than trying to sort out its, what on the face of it looks like a failing, Secured Loans business. I get the feeling Compass is merely reacting to other organisations financial results and the market growth in IVAs and merrily, but maybe blindly, jumping on the bandwagon.
The third thing I find questionable is Compass is going to rename itself ‘The Debt Advisor Group’. Now Compass isn’t the only one I consider at fault for doing this, but I find it misleading to end customers when organisations call themselves names like this. A slight exaggeration, but perhaps its like calling yourself a Doctor just because you advise people on cuts and bruises and profit from them buying band-aids and bandages.
