Information

Section 172(1) Statement

Novitas Loans Limited

The directors provide the following statement pursuant to the Companies Act 2006 (as amended by Companies (Miscellaneous Reporting) Regulations 2018) (the “Act”) to describe how they have acted in accordance with their duty under Section 172 of the Act (“Section 172”) to promote the success of the Company for the benefit of its member(s) as a whole, and in so doing, how they have had regard to those factors set out in Section 172, (1) (a) to (f) during the financial year.

Furthermore, in compliance with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended by the Companies (Miscellaneous Reporting) Regulations 2018), the directors provide the following statement to describe how they have engaged with employees, and how they have had regard to employee interests and the need to foster the Company’s business relationships with suppliers, customers and others, and in each case, the effect of that regard, including on the principal decisions taken by the Company during the financial year

Section 172 requires a director to have regard to the following matters, among others, when discharging their duty:

the likely consequences of any decision in the long term;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
the need to act fairly between members of the Company.

The board directors of the Company (“the Board”) is collectively responsible for managing the affairs of the Company to deliver its strategy by making important decisions, monitoring the underlying performance of the Company, as well as being a means for establishing ethical standards. Understanding the interests of key stakeholders is an important part of the CBG’s strategy and helps inform the directors’ decision making throughout the year.

Board meetings are held as required where the directors will consider the Company’s principal activities and make decisions. Meetings are scheduled to provide adequate time for consideration and discussion by the directors of the interests of stakeholders, and for the directors to seek further information from management, as required. As a part of those meetings, the directors receive information in a range of different formats to assist them in discharging their responsibilities under Section 172 when making relevant decisions. This information may include, among other things, reports and presentations on financial and operational performance, business updates, budget planning and forecasts, HR matters, as well as specific areas of engagement, such as employee opinion surveys. When making decisions, the Board seeks to understand the impact on each of its stakeholders, including the likely consequences of a decision in the long term, whilst acknowledging that a decision will not necessarily be favourable for all stakeholders, as there may be competing interests between them.

The Company is part of Close Brothers Group ("CBG"), and as such it follows a range of group-wide policies in place to protect employees and provide a safe working environment, to ensure compliance with all regulatory requirements and adherence to the highest professional and ethical standards in dealing with customers, suppliers and colleagues, as well as ensuring that it continues to be cognisant of its social and environmental responsibilities. In doing so, and by balancing the interests of the Company’s stakeholders when making decisions, the Board seeks to maintain a reputation for high standards of business conduct. Further information on these group-wide policies can be found in the Annual Report and Accounts of the Company’s ultimate holding company, CBG.

The directors seek to engage directly with stakeholders wherever possible on certain issues, though the size of CBG means that stakeholder engagement often takes place at an operational or CBG level. This approach creates greater efficiency and facilitates a greater positive impact on environmental, social and other issues than may be possible at a Company level, as well as ensuring consistency of approach across CBG. Where engagement has taken place at operational level, the outcome of that engagement has been brought to the Board for its consideration where relevant throughout the year. Additional details on engagement at CBG level with stakeholders, including employees, suppliers, customers, the community and environment can be found in the Strategic Report section of the Annual Report and Accounts of CBG.

The following information and case studies below set out further examples of how the Board has engaged directly and indirectly with stakeholders during the financial year, as well as detailing how the directors have had regard to employee interests and the need to foster the Company’s business relationships with suppliers, customers and others, and the effect of that regard, including on principal decisions taken throughout the year, as well as matters set out in Section 172 (1)(a)-(f) when discharging their duties under Section 172.

Our stakeholders, why we focus on them and the impact of engagement:

Colleagues

The Board recognises the importance of the contribution made by our employees, who deliver the highest levels of service for our customers, clients and partners.

We are committed to the development of our colleagues, ensuring they are supported and engaged.

Listening to our colleagues enables us to build an engaged workforce, allowing us to develop and retain high levels of expertise. We are able to ensure we are considering the views of all colleagues and making sure everyone feels included.

Stakeholders' key priorities

A safe working environment.
A fair, supportive, diverse and inclusive culture where employee feedback is valued.
Being appropriately rewarded for their contributions.
Opportunities for training and development.

How the board and management have engaged and considered stakeholder interests during the year

Throughout the year, our focus has been on employee wellbeing and morale, ensuring our employees feel supported and engaged, both at a team and business level.
CBG conducted their latest employee opinion survey (“EOS”), to gather feedback from our colleagues anonymously. The results of this survey gave us insight into key topics including customers and clients, culture, a sense of belonging, and comfort in speaking up.
CBG and the Company held regular town halls, providing employees with updates from across the group.

Customers, Clients and Partners

Our strategy depends on the strength of our relationships with customers, clients and partners, our specialist expertise and the maintenance of high standards of service. Central to all decision-making is doing the right thing for customers.

Stakeholders' key priorities

A responsive service with solutions that are flexible and executed with speed.
Ensuring the cessation of new business does not impact its existing customers as the Company remains focused on supporting its customers and managing the existing loan book.

How the board and management have engaged and considered stakeholder interests during the year

Notified customers of key developments impacting the status of their loan to ensure they were fully informed.
Reviewing our products to make sure they are compliant with the requirements of Consumer Duty and that the Company is acting to deliver good customer outcomes.
The Company has continued to work with solicitors and insurers, with a focus on supporting existing customers and managing the existing book to ensure good customer outcomes, where it is within the Company’s ability to do so.

Regulators and Government

The Company is regulated by the Financial Conduct Authority (“FCA”) and being part of CBG maintains an open and transparent relationship with all our regulators and as well as government authorities and trade associations.

We are committed to sustaining high standards of business conduct in line with regulatory, governmental and legal expectations and operate prudently within the laws and regulations that apply to us.

We foster an open, transparent and cooperative relationship with all our regulators, government authorities and trade associations in the jurisdictions in which we operate. Active engagement helps to ensure we are aware of and adapting to the evolving regulatory framework.

Stakeholders' key priorities

Good customer outcomes.
Operational and financial resilience.
Financial crime prevention.
Diversity and inclusion.
Digitisation and analytics.

How the board and management have engaged and considered stakeholder interests during the year

Ongoing dialogue with the FCA regarding the Company’s products.
Participation in broader CBG regulatory initiatives and programmes, including activity to support the ICAAP process.
Consideration of relevant policies and standards that support compliance with regulatory and compliance requirements.

Suppliers

We are focused on ensuring we have transparent and sustainable working relationships with our suppliers. Engagement is focused on driving an open and collaborative approach with our suppliers, as we work together to ensure services support us to meet our goals, whilst considering areas for improvement.

Stakeholders' key priorities

Appropriate and clear payment procedures.
Strong and sustainable relationships with CBG and the Company.
Robust risk management framework.

How the board and management have engaged and considered stakeholder interests during the year

Key supplier relationships have been managed centrally through our dedicated third-party management (“TPM”) function, or directly through the Company. This included regular meetings, monitoring, as well as an annual survey to seek feedback on CBG as a client.

Communities and Environment

As part of CBG, the Board is committed to contributing lasting value and making a positive impact on the communities in which we operate and the environment more broadly. This underpins the growing range of programmes and initiatives we support that benefit society and the environment.

Stakeholders' key priorities

A suitable strategy for approaching sustainability issues.
Support for community initiatives.
Take active steps to ensure equity of opportunity, regardless of background or experience.

How the board and management have engaged and considered stakeholder interests during the year

Throughout the year, we undertook various community, social and environmental initiatives, which are coordinated through the CBG sustainability working group.

Investors

The Company is a wholly owned member of the CBG, forming part of the Banking division; as such it operates as part of CBG in delivering its purpose and strategic objectives, in line with group-wide processes, governance and culture.

Stakeholders' key priorities

Focus on broader CBG purpose and strategic aims.
Alignment with group-wide risk, governance, compliance and financial priorities.
Consistent approach to stakeholder considerations and outcomes across CBG.

How the board and management have engaged and considered stakeholder interests during the year

The Company provided CBG with regular updates and feedback on business and financial performance, enabling them to update the wider market on the Company’s operations and performance as appropriate.

Furthermore, set out below is an additional detailed example of how the Board has engaged directly with key stakeholders during the financial year, how stakeholder interests have been considered in the decision-making of the directors, and how the directors have had regard to the matters set out in Section 172 (1)(a)-(f) when discharging their duties under Section 172. The Company is a wholly owned subsidiary of CBL and, as such, the duty of directors to have regard to the need to act fairly between members of the Company is limited.

Good Customer Outcomes

Through attaining compliance with the Closed Book requirements of Consumer Duty, which sets high standards of consumer protection across financial services, and requires firms to put their customers' needs first, a process of review and enhancement of measures in place has been completed during the year which focused on five key areas:

A review of outcome testing results is a standing agenda item at the Company’s governance forums, and agreed metrics were reviewed during the year by the Company’s senior managers and leadership team on a regular basis. Where triggers or limits were breached, underlying issues were discussed and, where appropriate, actions were agreed and tracked to completion.
A product review was performed during the year to ensure that the Company’s products and services are designed and delivered to support customers, such that their needs are met, including needs in relation to characteristics of vulnerability. The review confirmed that the Company’s products do support customers.
Fair value assessments have been performed for each product during the year. These assessments consider whether the products provide fair value to our customers, including those with characteristics of vulnerability. The review confirmed that The Company’s products provide fair value for the services offered by the Company.
A comprehensive review of all customer communications was completed to ensure the Company communicates in a way which is clear, fair and transparent; meets customers’ information needs; is likely to be understood; and provides information to the customer such that they are equipped to make informed decisions in a timely manner.
Customer journey maps have been reviewed and updated for each product to assess whether there were any potential foreseeable customer harms. The exercise identified that there were no actual harms identified but two process enhancements have been fully implemented as a result of the review.

The Company will continue to focus on achieving good customer outcomes, ensuring the customer is considered at all times.