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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 statement which follows 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 as between members of the Company. 

The board directors of the Company (“the Board”) is collectively responsible for managing the affairs of the Company to achieve its long-term prosperity 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. During the financial year, the Company has taken advantage of greater flexibility brought about by the Covid-19 pandemic to engage with stakeholders both in-person and virtually, including holding ‘hybrid’ events to widen participation. 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

Customers, clients and partners

Our stakeholders and why we focus on them

The needs of our customers, clients and partners are at the heart of our business and are core to our purpose of helping the people of Britain thrive over the long term. 

Putting the interests of our customers, clients and partners at the heart of our business is critical to our success, and the CBG’s purpose to help the people and businesses of Britain thrive over the long-term underlines the Board’s commitment in this area. 

Our long-term success depends on the strength of our relationships with customers, clients and partners. As such, central to all decision-making is understanding how our actions can help them and their businesses thrive. 

Stakeholders' key priorities 

  • A customer-led proposition 
  • A focus on treating customers fairly 
  • Strong personal relationships and specialist expertise 
  • Consistent and supportive customer service whatever the market conditions 
  • 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 we engage with them

Consistent delivery of high-quality service for customers, clients and partners by our specialist, expert teams is core to our business model. We ensure this is built around the needs of our customers, clients and partners and is aligned to our customer principles by seeking feedback from customers.

Key engagement during the year

Maintaining close contact with our customers, clients and partners throughout the year has been paramount as we continued to support those who have found themselves in difficulty in the current economic climate through forbearance and other concessions. Where needed we have regularly discussed our customers’ positions with them to ensure we were best supporting their needs as they evolved. 

Regular reporting and discussion of matters and updates relating to customers, clients and partners. 

Notified customers of key developments impacting the status of their loan to ensure they were fully informed. 

Reviewing and updating 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.


Our stakeholders and why we focus on them

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

Engagement with employees helps to attract, build and retain a high calibre talent pool and ensure that our employees remain enthusiastic about their work and their organisation. Regularly listening to employees’ feedback ensures they feel valued with their views recognised and acted upon.

Stakeholders' key priorities

  • A safe working environment 
  • A fair, supportive, diverse and inclusive culture where employee feedback is valued 
  • A commitment to invest in training and development 
  • Ensuring appropriate rewards and recognition for their contributions

How we engage with them

Engagement with our employees takes place daily through line managers, with senior management regularly speaking at Town Halls and other business-wide forums. Regular employee opinion surveys are undertaken and closely monitored and management frequently hold employment engagement activities to provide updates on business performance and gather real time feedback, which is listened to and acted upon. Training and mentoring programmes are in place to support the development of all employees.

Key engagement 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”), which closed in February 2023, to gather feedback from our colleagues anonymously. The results of the employee opinion survey gave insight into key topics including customers and clients, leadership, wellbeing, culture, a sense of belonging, and reward and recognition. A Novitas specific Pulse Survey was subsequently conducted to get more detailed information on specific themes raised in the CBG EOS upon which an action plan has been put together.

There were seven employee-led inclusion networks within CBG which control their own agendas and act as a voice for our minority colleague groups.


Why we focus on them and the impact of engagement

Our business is supported by a number of suppliers who enables us to provide high standards of service to our customers, clients and partners

Engagement with our suppliers enables the business to develop and maintain long-term and sustainable relationships. This engagement also helps enable our suppliers to better understand and align to our key policies and procedures and operate responsibly.

Stakeholders' key priorities

  • Appropriate and clear payment procedures
  • Strong and sustainable relationships with CBG and the Company
  • Fair and equitable conduct of business 

How we engage with them

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

Key engagement during the year

Review and consideration of material contracts with suppliers and ongoing supplier relationship management through TPM. 

Regulators and Government

Our stakeholders and why we focus on them

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. 

It is important we maintain a culture that is focused on retaining and encouraging high standards of business conduct and regulatory compliance and openness. Engaging with the relevant regulators and associations helps to ensure the business is aligned to the evolving regulatory framework. 

Stakeholders' key priorities 

  • Fair treatment of customers and clients 
  • Compliance with applicable regulation 
  • Recognition of the importance of resilience and risk management 
  • Provision of high quality information and regulatory reporting 
  • Active consideration of risks relating to sustainability and other climate matters 

How we engage with them

Regulatory risk and compliance reporting to local Risk and Compliance Committee. 

Consideration of the regulatory horizon including via risk and compliance reports. 

Consideration of relevant policies and standards that support compliance with regulatory and compliance requirements. 

Communities and Environment

Why we focus on them and the impact of engagement

As part of the CBG, the Board is committed to contributing long-term value and making a lasting, positive impact on the society in which we operate and the environment more broadly

Engaging with local communities helps the Board and our employees develop our understanding of our clients, customers and partners so that we can support them and help them to achieve their ambition, whilst also building employee engagement. 

We firmly believe that environmental considerations should form an integral part of our business decisions, and employees are actively engaged on responsible behaviours and environmental issues.

Stakeholders' key priorities 

  • A suitable strategy for approaching sustainability issues 
  • Support for community initiatives 
  • Job creation and social mobility 
  • A long-term focus on addressing the impacts of climate change 

How we engage with them

Throughout the year, we undertake various community, social and environmental initiatives, which are coordinated through our sustainability working group. Many of our employees participate in group-wide committees established to drive forward a range of initiatives around diversity and inclusion, helping the environment and charitable and community activities, with our employee volunteers the driving force behind our successful community and charitable events.

Key engagement during the year

We continued to run our established social mobility programmes, supporting up-and-coming talent in local communities and providing access and opportunities for those from less-advantaged backgrounds. 


Our stakeholders and why we focus on them

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 

Engagement supports the Company’s understanding of, and contribution to, broader CBG activities and strategic aims, and ensures delivery of long-term sustainable value for our shareholders in line with CBG policies and standards.

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 

How we engage with them 

Engagement with senior management at a CBG level to ensure the Board has a clear understanding of its role and contribution as part of CBG.

Updates to CBG level committees, including the CBG Board on the operation and performance of the Company. 

Key engagement 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 are some additional detailed examples 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

A key strategic objective for the Company is working to achieve good outcomes for its customers, and a number of initiatives have been implemented over the past year, which have been focused on delivering this.

The Company regularly reviews and improves customer communications to ensure that correspondence is clear and transparent for all customers with the aim of providing greater clarity and optimising customer experience. Root cause analysis is conducted on all customer complaints and reviewed monthly to identify recurring issues and areas that can be improved. The wording of complaint responses has been revised, simplifying the language and removing technical jargon to be more easily understood by customers. This wording has also been incorporated into customer FAQs to ensure consistency of messaging across all channels of communication.

The Company’s ongoing commitment to good customer outcomes is enshrined in all governance forums. This is especially highlighted by the Company’s monthly Customer Forum (which feeds into a CBG Customer Forum) a customer-centric meeting where relevant metrics are monitored and discussed, with actions taken to rectify any areas of concern and changes to business processes considered through the lens of the customer.

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