Two recent two senior appointments underscore TGA's shift to...

Two recent two senior appointments underscore TGA's shift to moving up the ladder as a credit provider. Peter Ryan is a lawyer with particular expertise in consumer credit and equipment finance. Wendy Yip has expertise in risk and capital management, and in respect to risk analytics, she holds a Master's degree in Applied Statistics. Investors who hold CCP shares, would be aware that CCP ascribes its well-honed analytics expertise as the factor that gives it an edge over its competitors. The fundamental business of both TGA and CCP is collecting streams of money from myriads of debtors, and it is analytics that equips these companies to optimise their deployment of funds in Loan Books and Lease Books – their source of revenue and profit.

Getting back to the rabbit-not-confused-by-the-spotlight analogy that I used in an earlier post, I recall John Hughes flagging management's intention to expand credit provision upstream years ago, and he stated that it was easier for a company that succeeded with customers at the bottom of the socio-economic ladder to expand higher up the ladder than it is for those higher up to expand into customer demographics lower down the ladder. Whether TGA's management thought that up-the-ladder expansion stood on its own merits, or it was aware of coming regulatory threats to the lowest rung of its market, is immaterial – TGA started the transformation years ago, and regulatory threats to the bottom-rung business are inconsequential. TGA's main limiting factor to expanding is funding, as one would expect from a business that deploys money up-front to get profitable repayment streams. Consequently, exiting the Small Amount Credit Contracts and the grubby end of product leasing is not going to cause “headwinds”, to use brokers' cant.

I believe that I have done this regulatory-risk matter to death. It's just that the two appointments hammered home to me the fact that TGA looking forward, is not the same company of a few years ago, but it seems the transition is not generally recognised.