Published on
19 January 2016
Mitigating risk for a growing small business
The Sovereign Story
As Sovereign Credit, part of the John Hughes Group, began to extend their business from primarily vehicle finance into personal loans, they were looking to proactively mitigate their increasing risk profile. They did this by implementing Equifax’s early warning FraudCheck solution.
As well as access to the de-identified Shared Fraud Database of confirmed and suspect fraud listings from Equifax, Sovereign Credit has access to the Fraud Focus Group giving them the opportunity to share fraud intelligence with peers to help shape their fraud strategy. They now have increased confidence in their ability to manage against potential losses, which is critical to their high risk niche lending model.
We have recently been doing a number of secured and unsecured personal loans and I felt our risks were increasing with this new business.- Shelley Gregory, Manager for Sovereign Credit
The John Hughes Group is one of the largest new and used vehicle dealerships in Western Australia. John Hughes himself has a high profile in WA and with his committed ‘hands on’ approach has diversified JHG into many peripheral areas.
John started Sovereign Credit because he saw a niche in the market where essentially good people could not get vehicle finance from mainstream lenders due to being credit impaired by factors outside of their control, such as divorce or long term sickness.
They are unique in that they have no website or advertising. It is ultimately John Hughes, or one of his agents, who decides whether to offer finance through Sovereign.
However despite the closed nature of the business and their existing due diligence process, they were finding that their new clientele included some people who were potentially good at deception.
As we are a lender of last resort with a high number of our clients being subprime, it has been great for us to have access to FraudCheck to assist in identifying clients who are potential fraudsters.- Shelley Gregory, Manager for Sovereign Credit
The introduction of FraudCheck
As a small company processing around 60-70 loan applications per month, Sovereign does not have the luxury of a dedicated fraud team. Instead, it reviews paperwork with a relatively inexperienced eye without any external support or structure.
They found introducing FraudCheck as part of their review process straightforward and easy to implement, allowing them to pinpoint anything unusual without going to the trouble of unnecessary investigation.
The process is quick and easy and gives us instant results which can be acted on immediately. As a small organisation, I like being part of Equifax's growing Fraud Focus Group. It puts us in touch with others in the industry who experience similar problems and I like the feeling of support you have being part of it.- Shelley Gregory, Manager for Sovereign Credit
The Results
The results were almost immediate. Within the first month of using FraudCheck they had a positive match, which on further investigation uncovered the potential client to be a known fraudster.
The information she provided looked legitimate. Without FraudCheck and the Fraud Focus Group we would have definitely faced a significant loss. It was great for us to see a positive result in such a short period of time. The money we had invested had been well and truly paid back by just one positive hit.- Shelley Gregory, Manager for Sovereign Credit