Annual Report
and Accounts
for the year ended 31 December 2023
Banking with heart
Vanquis Banking Group plc Annual Report and Accounts 2023
1
Governance Financial statementsStrategic Report Shareholder information
Headlines
Total customer numbers
1
1.75m
0.08m (2022: 1.67m)
Amounts receivable
from customers
£2.2bn
£0.3bn (2022: £1.9bn)
Adjusted profit before tax
– continuing operations
£24.9m
£101.7m (2022: £126.6m)
Regulatory capital
2
£609.0m
£69.8m (2022: £678.8m)
Liquidity
£703.3m
£225.1m (2022: £478.2m)
Statutory (loss)/profit before tax
– continuing operations
£(4.4)m
£114.5m (2022: £110.1m)
Operational carbon footprint offset
3
100%
(2022: 100%)
1 Total customer numbers net of cross product
holding.
2 The reduction in regulatory capital is primarily
due to the scheduled unwind of IFRS 9
transitional relief and dividends paid.
3 Not including scope 3 emissions associated
with suppliers’ and financed vehicle
emissions.
Certain alternative performance
measures (APMs) have been used
in this report (see pages 189 to 191)
Strategic Report
1 Headlines
2 Who we are
3 Investment case
4 Chairman’s statement
6 Chief Executive Officer’s review
8 Market overview
9 Strategy
10 Business model
12 Key performance indicators
14 Sustainability
29 Our customer case studies
32 Financial review
35 Operating review
40 Section 172(1) statement
42 Non-financial and sustainability
information statement
44 Risk management and principal risks
51 Viability statement
Governance
52 Chairman’s introduction to governance
54 Board of Directors
57 Setting our strategy
59 Promoting long-term sustainable
success: Board focus areas during 2023
61 The Board: our culture
63 Stakeholder engagement
and decision making
67 Effective engagement with shareholders
and stakeholders: investor relations
68 Division of responsibilities
70 Composition, succession and evaluation
71 Director induction and training
72 Outcome of the 2023 Board and
committee effectiveness review
73 Nomination Committee Report
78 Customer, Culture and Ethics
Committee Report
80 Audit Committee Report
84 Risk Committee Report
87 Directors’ Report
Directors’ Remuneration Report
93 Annual Statement by the Chair
of the Remuneration Committee
96 Remuneration at a glance
99 Annual Report on Remuneration
Financial statements
116 Independent auditor’s report
124 Consolidated income statement
124 Consolidated statement
of comprehensive income
124 (Loss)/earnings per share
125 Dividends per share
125 Balance sheets
126 Statements of changes
in shareholders’ equity
128 Statements of cash flows
129 Statement of accounting policies
136 Financial and capital risk management
141 Notes to the financial statements
189 Alternative performance measures
Shareholder information
192 Information for shareholders
Contents
Visit: vanquisbankinggroup.com/sustainability
Visit: vanquisbankinggroup.com
2023 was a challenging year for Vanquis Banking Group. After disappointing interim results in July 23, our
new management team took immediate action to return the Group to a path of sustainable, profitable
growth. Our North Star strategy will enable us to meet the needs of an expanded customer base and deliver
attractive returns to our shareholders by 2026.
Adjusted return on tangible equity
3.2%
(2022: 21.8%)
Vanquis Banking Group plc Annual Report and Accounts 2023
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Strategic Report
Vanquis Banking Group is a specialist bank
with a strong social purpose
Who we are
Customers Colleagues Communities The environment
Our ESG priorities
Ensuring that every
decision we take, from
proposition development
through to in-life
management, is guided
by a clear understanding
of how they will benefit
our customers.
Creating and sustaining
an inclusive and
supportive workplace
culture, where colleagues
feel healthy, well and
engaged, and that they
can reach their maximum
potential and deliver
their best work.
Improving the lives
of children and
young people in the
communities where
our customers live
and work by providing
them with access to
education, social and
financial inclusion, and
economic development
opportunities.
Ensuring that
climate-related risks
and opportunities are
integrated into our
business strategy and
decision making in areas
such as operational
resilience, customer
service, supply chain
management and,
where appropriate,
capital allocation.
Our customers’ core needs
Help me borrow healthily
Help me feel in control of my
everyday spending
Help me build a financial
safety net
‘To deliver caring banking so our customers
can make the most of life’s opportunities.’
Our Purpose
Credit Savings Money management
To offer our chosen target customers differentiated credit, savings and money management solutions,
with lending predominantly funded by retail deposits.
Our business model
We put our
customers at
the heart of
everything we do
We create
differentiated
solutions that
meet our
customers’ needs
We meet our
customers
where they are
We serve our
customers
efficiently and well
We deliver attractive
returns to all our
stakeholders
Read more on pages 10 and 11
Read more on page 10
Read more on page 16
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
Investment case
We have the potential to transform
our business
Despite a very challenging year, we have made a strong start to our transformation initiatives and are on track to deliver
customer benefits and efficiency gains in 2024 and beyond.
Our management team is implementing our new strategy
at pace to deliver attractive, sustainable returns.
A new Chairman, Chief Executive and Chief Financial Officer are now in post, supported
by a blend of new and experienced Board members and a well-balanced Executive
Committee of new and long-serving leaders.
1
We have a compelling social purpose.
We know that financial security is a challenge for many people, and that this has
become a more acute issue in recent years. Supporting our customers with a holistic
proposition is central to fulfilling our Purpose.
We participate in attractive and sizeable markets.
The consumer lending market is undergoing considerable change, marked by
economic headwinds, digital innovation, regulatory evolution and a socially motivated
drive towards financial inclusion. We are well placed to capitalise on these trends.
We have unique competitive advantages.
We benefit from a differentiated approach to our target customers and have carefully
developed propositions to respond to their needs. Assets to help us meet these needs
include the Snoop money management app and access to retail funding.
2
3
4
We are primarily funded by retail deposits.
We benefit from lower funding costs compared to many competitors, which
is achieved through the strategic use of retail deposits, thereby enhancing our
price competitiveness.
5
Read more on pages 6 and 7
Read more on page 9
Read more on page 11
Read more on page 8
Read more on pages 54 to 56
38%
of the Board and ExCo
new in post in 2023
144
years’ experience in
consumer finance and
supporting communities
Target addressable
market
23m
consumers
95%
of users would
recommend Snoop
Source: Snoop app survey
84%
funded by retail deposits
We have potential to deliver substantial returns to our key
stakeholders.
We will measure our success through a series of customer-focused and financial
measures. As a result of the strategic initiatives under way, we project an increase
in adjusted return on tangible equity (ROTE) to ‘mid-teens’ by 2026.
6
Read more on page 12
2026 adjusted ROTE:
‘mid-
teens’
Source: Experian (Financial Strategy Segments tool). This figure is the number of
individuals aged 18+ in the segments which comprise VBG’s chosen target market.
Vanquis Banking Group plc Annual Report and Accounts 2023
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Strategic Report
Introduction
2023 was a pivotal year for Vanquis Banking Group.
We successfully rebranded the Group under the Vanquis
brand and welcomed a new CEO, Ian McLaughlin, in late July.
However, it was also a challenging year, with poor interim
results leading to a significant fall in shareholder value.
We saw the departure of our Chairman and CFO in Q3. Yet,
in the toughest of corporate conditions, I take comfort from
the fact that dedication by colleagues to our customers
has remained a constant. This reinforced for me the bank’s
immense potential to serve an important social purpose,
namely to create equity of opportunity by helping our
customers to access the banking system. For us, the ‘S’ of ESG
could not be more real. It was the reason I joined the Board.
First impressions and immediate action
Since joining the Board in April 2023 and taking over as Chair
in September, I have visited all of our offices several times,
meeting colleagues and seeing first hand their commitment
to customers. It has also been a real pleasure to work with
Ian McLaughlin. His impact from day one has been nothing
short of inspirational. He has strengthened the executive
team, with the appointments of Dave Watts as CFO, Jill
Armstrong as Chief Customer Officer (CCO) and Jem Walters
as Chief Technology Officer (CTO), overseen the successful
acquisition and integration of Snoop to the Group, led by John
Natalizia, and embarked at pace on a plan to reset, redefine
and reinvigorate our business with the passion of someone
with a career-long commitment to retail banking.
Early progress and long-term potential
The Board is highly supportive of our Purpose and the strategy
being developed by the executive team, and is encouraged
by our early progress. The team have made difficult decisions
and started to deliver tangible results in a short space of time:
managing receivables growth while analysing customer
needs, applying necessary price increases and taking hard
decisions about colleagues to achieve an immediate reduction
in our cost base. The strategic review has been similarly well
executed, creating fresh enthusiasm and excitement amongst
colleagues about the business, and we look forward to further
improving customer outcomes and restoring intrinsic value.
An important first milestone for the new team was to deliver on
the guidance for FY23 set in October 2023, notably an adjusted
profit before tax (PBT) range of £25-30m, with an adjusted PBT
of £24.9m. We also recognise that we recorded a statutory loss
after tax for the year of £(6.0)m, generating a profit on a statutory
basis in the second half, thanks to cost management actions
and impairment provision releases of £74.5m in 2023 (2022:
£94.1m). Return on tangible equity (ROTE) for FY23 was 3.2%. At
our strategy seminar on 27 March 2024, we will set out how we
intend to build returns substantially over the next three years to
achieve a target adjusted ROTE of mid-teens by 2026.
Chairman’s statement
A pivotal year
“ The Board is highly supportive of
our Purpose and strategy being
developed by the executive
team, and is encouraged by our
early progress.”
Sir Peter Estlin
Chairman
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
Capital management and dividend
The Group intends to propose a final dividend of 1.0p per share
for 2023, subject to final Board and regulatory approvals. The
Group also signals its intention to pay a dividend of up to 1.0p
per share for 2024, subject to Board and regulatory approvals,
with measured progression in 2025. From 2026, following full
implementation of the new strategy, the Board will revisit the
capital allocation policy and reset the level of dividend from
which to maintain a progressive policy thereafter.
Board priorities
Aligned to the Group’s new strategy, we have initiated
changes in Board governance.
First, we have absorbed the work of the Customer, Culture and
Ethics Committee into main Board discussions to match the
over-arching customer focus being ingrained in the business.
Second, will use the opportunity of member succession to
ensure that we have the requisite skills and diversity of
thought to oversee the activities of a specialist bank. I would
like to take this opportunity to publicly thank Andrea Blance
for her near seven-year commitment to the Group, and in
particular for her role as Senior Independent Director (SID).
I look forward to working with Angela Knight as she takes
on the SID role. Further changes to the Board are expected
shortly as two existing directors are considering not standing
for re-election at the forthcoming AGM. In their stead, we
aim to announce the appointment of three new non-executive
directors, bringing a wealth of experience and skills to the
Board. We have also appointed Kate Rosenshine, as a Board
Observer, who will use the opportunity as an observer to
gain an understanding of what it takes to be a non-executive
director. Kate is currently a serving executive with Microsoft
where she leads their Digital Natives strategic partnerships.
Finally, while continuing to discharge our governance duties,
we intend to enhance shareholder engagement, equip
ourselves with better management information, adopt a
laser-sharp focus to critical risks and allocate more time on
our agenda to consider longer-term industry issues such as
knowing our customers in a digital world, and how to continue
to help improve the quality of regulation of the banking industry.
Conclusion
I want to conclude with heartfelt thanks to all my Board
colleagues for the support they provided to the business
during the past year. On behalf of the Board of Directors,
I also want to thank everyone at Vanquis Banking Group
who went above and beyond in their commitment to the
business, particularly in the last few months.
Looking forward into 2024, the Board will support and
challenge the executive team as it aims to balance
successful delivery of short-term milestones with long-term
value creation. Change takes its toll, and perhaps the most
important role for the Board is to ensure that key individuals,
and the organisation as a whole, have the resources
and mental resilience they need to keep pace with the
transformation under way. We are here to support them
and I look forward to reporting back on our progress.
Sir Peter Estlin
Chairman
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
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Strategic Report
Introduction
After I started at Vanquis Banking Group on 26 July 2023,
we immediately experienced a significant fall in our share
price as the market reacted to an unsatisfactory set of
interim results on 28 July. I spent my first five months rapidly
implementing the immediate changes required to put us on
a path to better performance. We also initiated a thorough
strategic review which will be presented at our strategy
seminar on 27 March 2024. I have been extremely impressed
with how my colleagues have responded and I am looking
forward to working with them for the benefit of our customers
as we bring our new strategic ambition to life.
Reflections on 2023
Despite some serious challenges being evident, I also discovered
many positives. First and foremost, our people really care about
doing the right thing for our customers; there is a genuine sense
of social purpose. Progress had also been made in creating
a fit-for-purpose corporate structure, including differentiating
ourselves through access to retail funding. However, the business
had been operating in product silos and the communication
and alignment between teams was not where it needed to
be. This had led to duplication in functions and there was little
evidence of cost discipline. Particularly evident was a lack of
visibility and accountability of centrally held costs.
Financially, the Group generated a £5.5m adjusted loss before
tax from continuing operations in the first six months of 2023
(1H22: profit £54.3m), despite 11% growth in net receivables (1H22:
0%). Costs rose by 6% in the 6 month period to 1H23, compared
to 1H22 and net interest margin (NIM) declined by 2.5% to 19.1%
(1H22: 21.6%). The Group recorded a statutory loss before tax from
continuing operations of £14.5m (1H22: profit of £46.9m). These
results drove a 29% decline in our share price on the day of
publication and crystallised the need for swift remedial action
as well as a fundamental review of our strategic direction.
Immediate action was taken in the second half of 2023 to
moderate lending growth, reduce IFRS 9 strain, reduce costs, and
implement appropriate price rises to improve product profitability.
In our Q3 trading statement on 17 October 2023, we committed to
deliver adjusted PBT for the year of £25-30m, and I am pleased
that the business traded broadly in line with our expectations,
delivering adjusted PBT of £24.9m (FY22: £126.6m). We recorded
a statutory loss after tax for the year of £(6.0)m. H2 performance
benefited from a combination of cost management actions and
impairment provision releases. Moderation of net receivables
growth in the second half led to year-on-year receivables growth
of 14% and swift action on costs contributed to a 10% half-on-half
reduction in adjusted operating costs. NIM for the year amounted
to 19.0% (FY22: 21.2%), reflecting the higher funding costs and lower
asset yield. Our key financial ratio is adjusted return on tangible
equity (ROTE). This rose from (1.8%) in 1H23 to 3.2% for FY23.
Three further priorities were established to help restore overall
performance and credibility.
1. Refreshed our Executive team to create the right mix of
customer experience, capability and personal values with
five new hires in key roles – Chief Customer Officer, Chief
Financial Officer, Chief Technology Officer, Chief Digital,
Data and Analytics Officer, and Chief of Staff – alongside
seven seasoned Vanquis Banking Group executives in
Operations, Transformation, HR, Communications, Risk,
Legal, and Internal Audit.
Chief Executive Officer’s review
Transforming our business - caring for
our customers
“ We’re here to deliver caring
banking so our customers
can make the most of life’s
opportunities. Doing that
well will allow us to deliver
attractive and sustainable
returns for our shareholders.”
Ian McLaughlin
Chief Executive Officer
Vanquis Banking Group plc Annual Report and Accounts 2023
7
Governance Financial statementsStrategic Report Shareholder information
2. Better communication to engage our colleagues,
partners and other key stakeholders on the need for
substantial change.
3. Simplifying our operating model and removing
duplication, this delivered cost savings in 2023 and will
deliver c.£60m of cost savings - without compromising on
customer service.
In summary, we have demonstrated an ability to set and
execute plans at pace and are seeing early progress from this.
However, we still have a lot to do.
Strategy
I am excited by the output of our North Star strategic review
and am looking forward to turning our plans into reality. We
have a new sense of purpose – ‘to deliver caring banking so
our customers can make the most of life’s opportunities’. The
power of purpose to unite and motivate an organisation is
immense. For us, the social purpose, the ‘S’ at the centre of
ESG, is vital. Environmental and Governance objectives are
also critical, and we will fulfil all our ESG responsibilities, but
the ‘S’ of social purpose is at the heart of our business.
We have always cared about the customers we serve: now we
have fundamentally changed the way we organise ourselves to
serve them even better. Previously, we defined our customers by
risk categories and organised our business around product lines.
Now, we put their needs at the very heart of the way we operate.
We undertook deep analysis using a well-respected financial
segmentation model, augmented by our own customer research
and data. From this, we identified three core customer needs:
- Help me borrow healthily.
- Help me feel in control of my everyday spending.
- Help me build a financial safety net.
We are expanding our customer proposition to meet these
needs and we are restructuring our service operation to
serve them more effectively. We will refresh our distribution
strategy, meet our customers where they are and develop new
partnerships to introduce ourselves to them.
Over time, we aspire to measure our success through a series
of customer KPIs which are somewhat unusual in the banking
sector, such as lifetime value, the increase we can drive in
customers’ credit scores and the cumulative value of savings
delivered to customers by Snoop. To these we will add more
traditional measures of sustainable performance such as
adjusted ROTE and Cost:Income ratio.
Key initiatives for 2024
As we start to implement our North Star strategy, these
initiatives will be our top priorities in 2024.
1. Develop compelling propositions for core customer needs.
2. Establish exceptional ‘through the journey’
management of risk.
3. Drive our distribution strategy to meet our customers
where they naturally are and improve our costs of
acquisition.
4. Establish Snoop as a uniquely valuable first point of
customer contact.
5. Continue to improve operational effectiveness, for example
by building on our successful offshoring programme.
6. Embed strong leadership and innovation, specifically
in digital, data and analytics.
7. Better manage our complaint volumes.
Outlook
Our customers have proved their resilience in the face of cost
of living pressures, and no discernible impact has been seen
in the business’s credit performance. We operate in a clearly
defined, growing market sector and have attractive points of
differentiation versus current peers (for example, Snoop and
lower funding costs).
As a business, we have short-term challenges to address,
however I am confident that our new strategy will deliver good
outcomes for our customers and attractive and sustainable
returns for our shareholders over the medium and longer term.
We are currently experiencing significant levels of third-party
complaint submissions many of which are speculative in
nature. The majority of complaints, which primarily relate
to lending origination rather than in-life servicing and are in
respect of a wide range of different matters with no common
theme or systemic issue, lack substance and are not upheld.
However, the higher than normal volumes and reviewing
them is materially impacting our costs and we are therefore
exploring proactive legal steps to address the situation.
The next two years, 2024 and 2025, will be periods of
restructuring for Vanquis Banking Group. We are already
taking significant steps to redevelop our customer proposition
and reset pricing, and we expect to return to modest lending
growth from the start of the second quarter of 2024. In 2025,
we intend to deliver accelerated but disciplined growth across
our full range of products, but the near-term adverse impact
of IFRS 9 accounting requirements linked to receivables
growth means that adjusted ROTE is expected to remain in the
low single digits.
Looking ahead to 2026, we expect to be delivering an adjusted
ROTE in the mid-teens driven by a return to sustainable
income growth serving a broader customer base; together
with the benefits of greater efficiency and significant payback
from our technology infrastructure investment.
Conclusion
Reflecting on the huge amount of change we have driven
in a very short period of time, I want to pay tribute to my
colleagues for the way they have embraced it. Thank you, to
each and every one of you. I also want to thank our investors
for trusting us to turn this business around. The change
programme ahead of us will be challenging and exciting.
Success is in the hands of a very talented and dedicated
team. As the UK’s largest specialist finance provider, we
have unmatched dedication to our chosen customers and
substantial potential to grow by meeting their needs. We
relish the challenge ahead and our colleagues are absolutely
focused on delivering caring banking so our customers can
make the most of life’s opportunities. This is when Vanquis is at
its best. It’s what we call ‘Banking with Heart’.
Ian McLaughlin
Chief Executive Officer
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
8
Strategic Report
Market overview
Embracing key trends
Market trends
The consumer finance market continued to experience
significant change in 2023, marked by consumers adapting
to economic headwinds, digital innovation, regulatory
evolution, a commitment to financial inclusion, and increased
responsiveness to ESG considerations.
Consumers adapting to economic headwinds: In 2023, UK
consumers have grappled with substantial economic hurdles,
including escalating interest rates, a growing tax load, and
inflation rates surpassing recent historical averages. Despite
these obstacles, they have shown resilience by adjusting their
habits. This has manifested in a more prudent approach to
spending together with a shift towards more environmentally
friendly choices.
Digital innovation: The industry emphasis is on creating
a low-friction, secure and convenient customer journey,
increasingly coupled with provision of tools to assist
consumers to improve their financial outcomes. The use
of AI, machine learning and data science is becoming
more prevalent throughout the consumer journey, as well
as within specialist functions such as finance, risk and HR.
Early proof points have included the early detection of
fraud through intelligent algorithms, and AI-based financial
management tools that leverage open banking and make
personalised recommendations.
Regulatory evolution: Regulatory frameworks continue
to mature, with emphasis on responsible lending practices
and consumer outcomes shaping the industry. Particularly
noteworthy in 2023 has been the introduction of Consumer
Duty by the FCA, together with clarification on the vehicle
finance discretionary commission investigation timeline.
It is to be noted that Vanquis Banking Group has never
used discretionary commission.
Financial inclusion: Lenders are actively engaging in
initiatives to bridge the financial inclusion gap for individuals
with non-prime credit histories. This ranges from alternative,
and frequently manual, underwriting through to tailored
approaches to forbearance.
ESG (environmental, social and governance) considerations:
Sustainability and responsible lending practices are gaining
prominence, with lenders increasingly factoring in ESG
within their propositions, aligning with a growing consumer
consciousness about the impact of their purchase choices.
This trend is not only driven by regulatory pressures but also
reflects a broader shift in societal values, as evidenced by
a range of recent consumer surveys that have found that
sustainability is an important consideration for consumers
when making a purchase.
Market opportunity
Our business model is to offer our chosen target customers
differentiated credit, savings and money management solutions,
with lending predominantly funded by retail deposits.
Our approach to targeting in the past has been ‘who-led’ - that is,
we have defined target customers at product level first in terms of
hard data characteristics such as credit score. Whilst this remains
undoubtedly useful for credit decisioning, we have been minded
to develop a different way of thinking.
Our revised approach is ‘needs-led’. We have identified and
profiled substantial groups of customers where core needs are
common, even if demographics and attitudes vary.
This offers a more intuitive starting point for the development of
value propositions and solutions, and allows us to take a holistic
view of the customer rather than several single-product lenses.
This has enabled us to develop a richer understanding of our
existing customer base and our ‘market penetration’ strengths
to consolidate.
We have identified additional ‘market development’ space where
we can grow because we have both the capability to play and
a clear ‘right to win’.
As we develop a wider, holistic proposition for our chosen
target customers, we will seek further growth through
‘product development’.
The chart below summarises our breakout approach:
Existing
markets
New
markets
Existing products
Market
penetration
Consolidating
existing
strengths
Market
development
Growing
our customer
footprint
Product
development
Building a
holistic
proposition
Diversification
No
current
plans
New products
Vanquis Banking Group plc Annual Report and Accounts 2023
9
Governance Financial statementsStrategic Report Shareholder information
Strategy
Our North Star strategy
Our customer-led strategy is based on our
detailed understanding of the lives and needs
of those we serve.
We acknowledge and celebrate the diversity and individuality
of modern society, and have come to appreciate that, amid
this complexity, we can identify sizeable cohorts of consumers
who have core needs in common. Three such core needs are:
– Help me borrow healthily.
– Help me feel in control of my everyday spending.
– Help me build a financial safety net.
Our ethnographic studies, other qualitative research, surveys,
benchmarking and data science have together helped us
establish existing strengths to consolidate, areas to develop
and opportunities for business growth.
This has led us to review and re-articulate our Group Purpose:
’to deliver caring banking so our customers can make the most
of life’s opportunities’.
Our future solution set and customer experience are being
co-created with customers through an ‘empathic design’
process which draws in expertise from across the Group.
Our strategy is being delivered through five strategic themes:
Market status quo
– Parent/child relationship
– Banking jargon
– Customer feels judgement and bias
– Bank’s timeframes
– Customer as a profit source
Our principles
– Coach and empower
– Simple language
– Customer feels supported towards resilience
– Respect customers’ time
– Customer integral to Purpose
Delivery of these themes will be underpinned by a set of progressive principles which contrast markedly to the industry norms,
creating an organisation that is intrinsically differentiated.
Our five strategic themes and objectives
Strategic themes Objectives Focus for 2024 Links to risks
Find our Principal
risks on pages
44 to 50
Links to KPIs
Find our KPIs on
pages 12 and 13
1. Customer
centricity
To serve our customers with
differentiated solutions that proves
Vanquis Bank:
– cares about my needs;
– is an organisation I trust;
– empowers me to make the right
financial choices for me; and
– supports me when it matters.
– Understand the customer and
introduce targeted customer
propositions.
– Grow customer engagement to drive
card utilisation.
– Improve customer experience.
1
2
3
7
8
9
10
11
1
2
2. Insightful risk
management
To provide exceptional ‘through the
journey’ management of risk, based
on an intimate understanding of the
customers and their needs.
– Invest in our risk management
capability to differentiate in the
market.
1
2
3
7
8
10
12
6
7
8
9
10
11
12
13
14
15
16
3. Efficient
organisation
To establish a high-performing and
continuously improving organisation
across management, operations
and financial resource management
and capital.
– Optimise capital and liquidity
management.
– Execute cost transformation.
– Continue enhancing operational
excellence, with a focus on collections
and fraud.
4
5
6
8
10
11
12
6
7
8
9
10
11
12
13
14
15
16
4. Digital, tech,
data and
analytics
To leverage efficient modern
technology that supports digital-first
customer and colleague experience.
– Continue with the technology
transformation.
– Execute data and analytics
transformation with the benefit of
Snoop functionality.
1
2
3
7
8
9
6
7
8
9
10
11
12
13
14
15
16
5. A great people
proposition
To empower people with the skills,
career and culture that inspires great
customer empathy and belief in
our Purpose.
– Progress our collective ‘one Group’
culture.
– Create an enabling environment that
is supportive of the strategy.
1
2
3
10 3
4
5
Vanquis Banking Group plc Annual Report and Accounts 2023
10
Strategic Report
Business model
We are driven by our
customer-centric approach
Our business model is the way that we generate financial
and non-financial value for customers and broader
stakeholders, and starts with a deep understanding of our
customers’ needs, preferences and behaviours, gained from
extensive market research and data analysis. This approach
ensures that every decision we take, from proposition
development through to in-life management, is guided by
a clear understanding of how it will benefit our customers.
The comprehensive analysis undertaken has revealed
the co
re needs of
consumers, and will allow us to
build a tailored proposition. This continuously deepening
understanding positions us more favourably to
become the preferred partner for our target customers.
Here is a glimpse into the work we have undertaken
on the core needs of those we serve:
Building on our Group Purpose to deliver caring
banking so our customers can make the most of life’s
opportunities, we care about our customers’ needs, earn
their trust, empower them to make healthy financial
choices and support them when it matters.
Here is how we look to make a difference for our
customers at each stage of the journey:
Understanding our customers’ needs Our customer proposition
Core needs:
‘Help me borrow healthily’
We understand that healthy borrowing is based on
establishing quality, long-term relationships with customers.
Banking can often be filled with jargon, creating a trust gap
with customers who may feel judged in difficult situations.
We can help to bridge this gap by communicating with
customers in a language they understand, helping them
grasp their commitments so they can successfully manage
their debts over time. We encourage customers to reach
out to us if they need assistance, providing options, flexibility,
and a supportive environment where trust can be built
without fear of judgement.
‘Help me feel in control of my
everyday spending’
We understand that money is simply a tool, and we
recognise that our customers may be managing
tight finances or seeking to maximise opportunities
while prioritising peace of mind, short-term goals,
and quality interactions. Long-term goals can often
seem unattainable.
We can help by recognising that our customers’ emotional
needs are just as important, and we strive to offer tools
and services that provide customers with guidance and
personalised insights. Our aim is to simplify day-to-day
financial decisions and help customers achieve peace
of mind in their everyday lives.
‘Help me build a financial safety net’
We understand that money is tight for many people, with
often little or no savings to fall back on when an unexpected
household expense hits. This can lead to increases in
indebtedness and take some time to recover from.
We can help people be prepared for the unexpected by
building a savings buffer, guiding them to unlock hidden
opportunities to save money, and offering motivation to
get started and keep going.
Customer centricity: our customer journey
Awareness
We create awareness by meeting
customers where they are.
1
Consideration
We have a differentiated value proposition
that is designed around customers’ core
needs rather than being product led.
2
Conversion and onboarding
We aim to provide a frictionless first contact
and onboarding journey, leveraging
our evolving systems capability and
emerging technologies.
3
Addressing customers’ core needs
We empower our customers to borrow
healthily, feel in control of their everyday
spending and build a financial safety net.
4
Support when it’s most needed
We are committed to being there for our
customers in challenging times as well
as good ones.
5
Deepening relationships
We present solutions which address our
customers’ needs and encourage longer
and deeper relationships.
6
Advocacy
We have genuinely positive impact on our
customers, so they are much more inclined
to recommend us.
7
Vanquis Banking Group plc Annual Report and Accounts 2023
11
Governance Financial statementsStrategic Report Shareholder information
Our needs-led approach is naturally inclusive of anyone
who has the needs we have identified. We are open to
receiving custom from a diverse group and our target
market has a wide income range.
The common denominator for the customers we aim to
serve is that they have low financial resilience, relatively
low levels of disposable income and savings, and they are
using their opportunities to the limit due to circumstances
or priorities. Long-term goals feel so hard to reach that we
observe people prioritising short-term goals.
Our customers do not aim to accumulate wealth, but to
have comfort, stability, peace of mind and to live life to its
fullest. They simply want ‘enough’ to remove some of the
barriers and burdens they face and to feel they have the
space to truly live, rather than just get by.
Ultimately, they are striving for peace of mind. Money is
intrinsically related to their goals as an enabler - it is a
means to an end for them.
We believe deeply that our customer proposition and
solutions can serve to empower the millions of people
in this position to get closer to achieving their goals by
borrowing healthily, feeling in control of their everyday
spending and building a financial safety net.
Our customer proposition is carefully designed and
developed to achieve success in our chosen markets,
leveraging our existing capabilities and adopting
enhancements and continuous improvements we make
on the basis of customer and colleague feedback.
Furthermore, we are capitalising on our ongoing
investments in technology to bolster our capabilities,
drive process efficiencies and add further value for our
customers. Collectively, these will move us to a position of
clearer differentiation and improved market positioning.
Our success in the marketplace will be determined by
the strength of our business model and the relative
advantages that are intrinsic to our organisation.
These strengths provide value to our customers,
colleagues, regulators, shareholders, suppliers and
communities, while reaffirming our commitment to
quality and innovation:
Our strengths
Our core products
– Credit cards
– Vehicle finance
– Personal loans
– Savings
– Budgeting and money management
Lower funding costs
We benefit from lower funding costs compared
to many competitors, which is achieved through
the strategic use of retail deposits, thereby
enhancing our price competitiveness.
Financial efficiency
Our robust retail deposit base equips us with
the capability to align lower-cost deposits with
lending volumes, ensuring financial efficiency in
the matching of assets and liabilities.
Risk-based pricing
Our organisation has extensive credit experience
and capability in the markets we serve.
Broad product portfolio
Our broad product portfolio caters to a spectrum
of needs within our target market, providing
comprehensive financial solutions and fostering
opportunities for cross-purchase.
Snoop
Snoop, a unique capability, empowers our
customers to manage their finances effectively
and realise tangible savings.
Established brands
Our Vanquis and Moneybarn brands have
earned a strong reputation and trust within our
target market, reinforcing our market presence.
Vanquis Banking Group plc Annual Report and Accounts 2023
12
Strategic Report
Key performance indicators
The key performance indicators (KPIs) represent the principal metrics reported to Group
management on a monthly basis to support the strategic decision making.
Customer centricity A great people proposition
Customer satisfaction
- Cards
4.4
21 22 23
4.7
4.6
4.4
Definition
The extent to which surveyed
customers were satisfied with
the service provided on a scale
of 1 to 5.
Strategic focus
Demonstrates how happy our
customers are with the service
they are receiving.
Comment
Senior management
gender diversity
35%
21 22 23
27
33
35
Definition
The percentage of the Group’s
senior management who
identify as female.
Strategic focus
Committing to the Women in
Finance Charter by achieving
40% target by 2026 through
delivering signatory actions to
create a more equal, inclusive
and diverse workplace.
Comment
We continue to drive
actions to support better
gender balance.
1
Customer satisfaction
- Vehicle finance
3.7
21 22 23
4.4
4.3
3.7
Definition
The extent to which surveyed
customers were satisfied with
the service provided on a scale
of 1 to 5.
Strategic focus
Demonstrates how happy our
customers are with the service
they are receiving.
2
Colleague
engagement score
56%
21 22 23
69
68
56
Definition
A metric used to gauge
colleagues’ engagement,
motivation and commitment
towards their work.
Strategic focus
To continuously monitor and take
action to maintain and improve
colleague engagement.
Comment
The survey conducted in
December 2023 is reflective of
the extent of change in 4Q23.
3 4
Community
investment (£m)
£1.4m
21 22 23
1.4 1.4 1.4
Definition
The cash cost of contributions
provided to community
projects or charities.
Strategic focus
Investments in the
communities we serve to
improve our customers’ lives.
Comment
We continue to invest in
our Foundation partners
to address the wide range
of social and financial
inclusion issues that are
relevant to our customers
and the communities where
we operate.
5
Insightful risk management - Efficient organisation - Digital, tech, data and analytics
Adjusted ROTE
(%)
3.2%
21 22 23
32.2
21.8
3.2
Definition
Adjusted return on tangible equity
(ROTE) is defined as adjusted profit
after tax for continuing operations
as a percentage of average
tangible equity for the 12 months
ended 31 December.
Strategic focus
Demonstrates how well the
Group’s returns are generated
from its tangible equity. Removing
the impact of whether the
development has occurred through
organic or inorganic growth.
Comment
The reduction reflects the lower
adjusted PBT in 2023.
6
Adjusted PBT
(£m)
£24.9m
21 22 23
167.8
126.6
24.9
Definition
Adjusted profit before tax is
stated before amortisation
of acquisition intangibles,
discontinued operations and
exceptional items.
Strategic focus
Profits which will impact
organic investment within the
Group or dividend payments
to the Group’s shareholders.
Comment
The reduction primarily
reflects the increased cost
of risk year-on-year.
R
7
Statutory (LAT)/PAT
(£m)
£(6.0)m
21 22 23
134.6
82.3
(6.0)
Definition
Statutory (loss)/profit after tax
is stated before discontinued
operations.
Strategic focus
Profits which will impact
organic investment within the
Group or dividend payments
to the Group’s shareholders.
Comment
Concrete plans are in place
to deliver progressive growth.
8
A great people
proposition continued
Whilst declining, customers remain positive about the experience we
deliver. Management actions in FY23 are expected to yield service
improvement in FY24.
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13
Governance Financial statementsStrategic Report Shareholder information
Key
Certain alternative performance measures (APMs) have been used in this report.
See pages 189 to 191 for an explanation of their relevance, definition and method of calculation. In the current year, the updated
management team have revised their focus to the APMs presented below, there have been no changes to these APMs in the year.
R
Links to remuneration
Net interest margin
(%)
19.0%
21 22 23
20.5
21.2
19.0
Definition
Interest income less interest
expense, excluding exceptional
items for the 12 months ended
31 December as a percentage
of average gross receivables.
Strategic focus
Demonstrates the returns
generated from customers.
Comment
The decline reflects the higher
interest costs and lower
asset yield.
9
Risk-adjusted margin
(%)
13.9%
21 22 23
21.3
20.3
13.9
Definition
Total income, excluding
exceptional items, less
impairment charge for the
12 months ended 31 December
as a percentage of average
gross receivables.
Strategic focus
Demonstrates the returns
from customers after
impairment charges.
Comment
The decline reflects higher
impairment charges and
higher interest costs.
10
Customer receivables
(£bn)
£2.2bn
21 22 23
1.7
1.9
2.2
Definition
Amounts receivable from
customers as reported on
the balance sheet for the
Group’s continuing operations
representing gross receivables
less impairment provision
calculated in accordance
with IFRS 9.
Strategic focus
Amounts receivable from
customers net of provisions.
Comment
Receivables have grown
year-on-year notwithstanding
the active volume
management in 2H23.
11
CET1 ratio
(%)
20.5%
21 22 23
29.1
26.4
20.5
Definition
The ratio of the Group’s
Common Equity Tier 1
(CET1) to the Group’s risk-
weighted assets measured in
accordance with the Capital
Requirements Regulation (CRR).
Strategic focus
Demonstrates the Group’s
ability to withstand
financial distress.
Comment
The Group maintained a
robust capital position with a
CET1 ratio of 20.5%, within the
Group’s updated CET1 target
range of 19.5% to 20.5%.
12
Cost:income ratio
(%)
60.9%
21 22 23
54.8
59.9
60.9
Definition
Adjusted annualised operating
costs as a percentage of
annualised total income for
continuing operations.
Strategic focus
Efficiency of the cost base
in delivering returns.
Comment
The rising trend reflects
broadly static income, with
cost headwinds mitigated
by proactive management
actions in the second
half of 2023.
13
Total capital ratio
(%)
30.6%
21 22 23
40.6
37.5
30.6
Definition
The ratio of the Group’s total
regulatory capital (own
funds) to the Group’s risk-
weighted assets measured in
accordance with the CRR.
Strategic focus
Demonstrates the Group’s
ability to withstand financial
distress and the ability to
facilitate future growth in risk-
weighted assets.
Comment
The Group continues to hold a
significant total capital surplus.
14
Liquidity coverage ratio
(%)
1,263%
21 22 23
2,073
1,139
1,263
Definition
A regulatory measure that
assesses net 30-day cash
outflows as a proportion
of high-quality liquid
assets (HQLA).
Strategic focus
Demonstrates the
Group’s ability to meet
its short-term liabilities.
Comment
The Group continues to
hold a significant level
of excess liquidity.
15
Adjusted RORE
(%)
4.0%
21 22 23
32.3
22.2
4.0
Definition
Adjusted return on required
equity (RORE) is defined as
adjusted profit after tax for
continuing operations divided
by the Group’s monthly
average PRA regulatory capital
requirement including PRA
buffers for the period.
Strategic focus
Demonstrates how well the
Group’s returns are reinvested
and is an indicator of its
growth potential.
Comment
The adjusted RORE reduced
in FY23 reflecting the reduced
profitability year-on-year.
R
16
Insightful risk management - Efficient organisation - Digital, tech, data and analytics continued
Vanquis Banking Group plc Annual Report and Accounts 2023
14
Strategic Report
We have a diverse customer base across
the UK and aim to support their everyday
spending, help to build savings and
promote healthy borrowing.
– We provide access to appropriate
credit products and services to our 1.75
million customers so that they can live
their lives, improve their credit score
and increase future financial options.
– We conduct customer segmentation
research to better understand and
meet the needs of our customers
and support them to be more
financially resilient.
– We work with charities and partners in
the communities we serve to address
issues such as debt advice, financial
education and other consumer
vulnerability matters.
Our shareholders are both institutional
and individual investors. We are
committed to providing them with
clear and accurate information on our
strategy and business performance, and
delivering sustainable, profitable growth
based on our deep understanding of,
and commitment to, our customer base.
– We corresponded and met with
shareholders representing over two-
thirds of our issued share capital
between our interim results in July 2023
and year end in order to create better
shareholder understanding of our
investment case.
– We guided to adjusted PBT for FY23 of
£25-£30m in our third quarter trading
statement in October 2023 to create
greater transparency of expectations,
and delivered in line with this range.
– We issued a market update on 11 March
2024 ahead of our FY23 results on 27
March 2024 to clarify our expectations
for 2024 and 2025.
– We will hold a strategy seminar on
27 March 2024 to communicate the
findings from our North Star strategic
review and describe the benefits we
expect to deliver.
Our colleagues are vital to the Group’s
long-term success. It is essential that
we continue to attract and retain the
best talent by providing a workplace
culture that is encouraging, supportive
and inclusive.
– We have partnered with Great Place
to Work to support our colleague
engagement and culture agenda.
– Our Inclusion Community Affinity
Groups (which focus on gender,
race, disability, LGBTQ+ and social
mobility) have helped to celebrate
diversity and inclusion and improve
our workplace practices.
– We launched a new Learning and
Development Hub for colleagues
which offers more training and
development opportunities
to colleagues.
The suppliers we use are wide ranging,
from our outsourcing partners to IT and
software providers. They play a key role
in the delivery of our operations and we
ensure that they comply with our due
diligence process which covers issues
such as human rights, climate change
and data protection.
– We rolled out new Supplier
Management Framework activities
and standards which continue to
standardise the Group’s procurement
processes and procedures.
– We carried out a ‘voice of the
supplier’ survey to gauge the Group’s
performance in relation to a range of
supplier satisfaction and procurement
satisfaction themes.
– We have continued to engage with
suppliers via our due diligence process
on the climate risk agenda.
We are subject to the regulations,
rules and approvals of the FCA and
PRA. Maintaining proactive, open and
constructive dialogue with these bodies
and policymakers is key to ensuring
that regulations meet the needs of our
customers and other stakeholders.
– We have engaged with our supervisors
at the FCA and PRA on an ongoing
basis on issues that are material to our
business strategy.
– We have participated in FCA
consultations on its Credit Information
Market Study.
– We engaged with Government
bodies and MPs on a range of issues
of importance to the firm including
financial inclusion and social mobility.
Our social purpose inspires us to
improve the lives of children and young
people in the communities where our
customers live and work by providing
them with access to education, financial
and social inclusion, and economic
development opportunities.
– In 2023, we launched the Vanquis
Banking Group Foundation whose
vision is to build a future where
every child and young person
in the UK is supported to achieve
their full potential, contributing
to a brighter future.
– We continued to work with partners
School-Home Support and the Dixons
Academies Trust to support school
pupils with items of uniform including
blazers, shoes, coats and PE kits.
– We disbursed over £236,000 in grants
to 30 voluntary organisations focusing
on inequality, exclusion, disadvantage
and mental health issues.
Sustainability
Customers
Shareholders
Colleagues
Suppliers
Effective engagement with our stakeholders is key to how Vanquis Banking Group operates and
informs our decision making processes, not only in respect of the products and services we offer
to our customers, but also in terms of supporting the delivery of our Purpose. It is also important
that we respond to issues that could impact our stakeholders, such as climate change.
Our key stakeholders
Understanding and engaging
with our key stakeholders
Regulators and Government
Communities
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Governance Financial statementsStrategic Report Shareholder information
Introduction: Our ESG strategy
Our Purpose to deliver caring banking so our customers can
make the most of life’s opportunities brings clarity to why
Vanquis Banking Group exists and the important role that
we play in the lives of our 1.75 million customers through the
provision of responsible and sustainable products and services.
It also underlines our commitment to respond to the needs
of our key stakeholders, whether they are our customers,
colleagues, communities, and managing and reporting our
environmental, social and governance (ESG) performance.
ESG strategy
To capitalise on this opportunity, the Group has a sustainability
strategy which is aligned with our Purpose and centres on the
following two areas: operating our business of lending to our
customers in a responsible manner; and acting responsibly and
sustainably in all our stakeholder relationships. This enables us
to focus our attention on championing equality, diversity and
inclusion, and providing our colleagues with a working environment
that is healthy, safe and meritocratic; treating our suppliers fairly;
supporting the communities we serve to be financially and socially
included so that they can thrive; and playing our part in the UK’s
transition to a cleaner, net zero economy.
Our Purpose, and the goals of our sustainability strategy, align
with the UN’s Sustainable Development Goals (SDGs). The
following SDGs are the ones we believe the Group can make
the most significant contribution towards.
ESG KPI performance overview
We use a number of non-financial measures to assess,
manage and report the embedding of our Purpose, vision and
mission as well as our performance against our stated ESG
objectives and targets. These measures also support the Group
to meet non-financial reporting requirements under sections
414CA and 414CB of the Companies Act 2006 and inform the
remuneration of the executive directors, which is, in part, linked
to our progress towards the Group’s ESG objectives which are
set out below.
Our policies
To support the embedding of the Group’s ESG strategy, we
have a number of corporate policies which cover a range of
environmental and social issues. These include an Environmental
Management Policy, Modern Slavery and Human Rights Policy
and Inclusion and Diversity Policy. These and other policies are
available at www.vanquisbankinggroup.com and details of how
they are governed are summarised in our the Group’s Non-
Financial Information Statement on pages 42 and 43, which has
been produced to
comply with sections 414CA and 414CB of the
Companies Act 2006
.
Objective Measure Performance in 2023
Customers
To ensure that every decision we take,
from proposition development through
to in-life management, is guided by a
clear understanding of how they will
benefit our customers.
Levels of customer satisfaction. Credit cards: 4.4/5 (2022: 4.6/5).
Vehicle finance: 3.7/5 (2022: 4.3/5).
Number/percentage
of customer complaints.
Total number of complaints: 69,609
(2022: 28,576).
Number of complaints referred to the
FOS: 9,974 (2022: 2,953).
% of FOS complaints upheld in the
customer’s favour: 14% (2022: 35%).
Colleagues
To create and sustain an inclusive and
supportive workplace culture, where
colleagues feel healthy, well and
engaged, and that they can reach their
maximum potential and deliver their
best work.
Colleague engagement score as
measured by annual colleague
engagement survey.
Overall colleague engagement score:
56% (2022: 68%).
Better Everyday Index score which
relates to the Group’s culture and the
way we treat customers and colleagues.
Better Everyday Index score: 48%
(2022: 60%).
Communities
To improve the lives of children and
young people in the communities where
our customers live and work by providing
them with access to education, social
and financial inclusion, and economic
development opportunities.
The amount invested per year to
support community programmes,
money advice programmes and
social research, including the number
of grants distributed to grass roots
community organisations.
£1.4m invested to support the Group’s
Foundation (2022: £1.4m).
1,696 hours volunteered by colleagues
(2022: 1,014).
The environment
To ensure that climate-related risks
and opportunities are integrated into
our business strategy and decision
making in areas such as operational
resilience, customer service, supply
chain management, and, where
appropriate, capital.
Absolute scope 1 and 2 greenhouse
gas (GHG) emissions.
Scope 1 and 2 emissions: 806 tCO
2
e
(2022: 1,017 tCO
2
e), a reduction of 21%.
Total scope 1 and 2 (and associated
scope 3) emissions: 1,039 tCO
2
e
(2022: 1,348 tCO
2
e), a reduction of 23%.
Updated report which complies with
the recommendation disclosures of
the Task Force on Climate-related
Financial Disclosures (TCFD).
Refer to pages 19 to 28 of this report.
“ Through the management and
reporting of our ESG priorities, we’re not
only able to ensure that our Purpose is at
the heart of our business, which will put
customers at the centre of everything
we do, but that the Group is on a path to
a strong and sustainable future which
delivers for our customers, colleagues,
communities and shareholders.”
Ian McLaughlin
Chief Executive Officer
Vanquis Banking Group plc Annual Report and Accounts 2023
16
Strategic Report
Colleague engagement
Colleague engagement is a key way of monitoring and
assessing our culture where colleagues can learn and
develop their careers, and deliver on our Purpose. In
December 2023, we used a new survey provider, Great
Place to Work (GPTW), to measure colleagues’ views and
experiences. Trust is at the heart of the GPTW model, which
is grounded by strong values and effective leaders. Scores for
overall colleague engagement and our Better Everyday Index,
which is linked to the Group’s culture, fell during the year, which
reflects the levels of uncertainty and change that colleagues
have experienced, and are set out opposite.
Overall colleague engagement score in 2023:
56%
(2022: 68%)
Better Everyday Index score in 2023:
48%
(2022: 60%)
Sustainability continued
Our colleagues
Having happy and healthy colleagues is critical to the Group’s
success. We recognise that each colleague has an important
role to play in creating and sustaining an inclusive and
supportive workplace culture. We know that when colleagues
feel healthy, well and engaged, they can reach their maximum
potential and deliver their best work.
About our workforce
Our workforce is made up of permanent and fixed-term
employees, and contractors (individuals from companies
or suppliers who provide a service to the Group). At Vanquis
Banking Group we call these our colleagues.
Building an inclusive culture
Continuing to build and sustain an inclusive workplace
culture, where all our colleagues can be themselves and
thrive, is key to the delivery of our strategy and ensuring that
we are best placed to deliver for the diverse customer base
we serve. Throughout the year, our five Affinity Groups (which
focus on gender, race, disability, LGBTQ+ and social mobility)
have celebrated a variety of events, including Leeds Pride,
Black History Month, National Inclusion Week and National
Apprenticeship Week. They have also supported the business
to help build inclusive teams by establishing partnerships
with Women in Data, LGBT Great, Investing in Ethnicity and
by becoming a Disability Confident Committed Employer.
We also continue to engage with colleagues through
an annual survey to collect diversity, inclusion and
socio-economic background information.
Diversity and inclusion data as at 31 December 2023
1
– 18% (2022: 18%) of colleagues informed us that they had
a disability or long-term health condition.
– 18% (2022: 17%) of colleagues informed us that come from
a Black, Asian, other White or Minority Ethnic background.
– 5% (2022: 6%) of colleagues informed us that they were
part of the LGBTQ+ community.
– 69% (2022: 71%) of colleagues attended a state-run or
state-funded school when growing up.
1 This data is based on colleagues’ voluntary self-declaration via our
December 2023 Great Place to Work colleague engagement survey
which accounts for 70% of the Vanquis Banking Group workforce.
By being a signatory to the HM Treasury Women in Finance
Charter, the Group is committed to improving female
representation at senior management and director level. This
commitment is supported by a target to have 40% female
representation in the Group’s senior management population
by December 2026. Further inclusion and diversity information
which relates to the FCA’s Listing Rules 9.8.6(9) and 9.8.6(10) is
set out in the report of the Nomination Committee on pages
75 to 77.
As of 31 December 2023, the representation of women and men in the Group’s workplace is as follows:
Total No. of women % of women No. of men % of men
Board 10 5 50% 5 50%
Executive Committee 10 3 30% 7 70%
Senior management population 105 36 34% 69 66%
All workforce 1,478 720 49% 758 51%
Vanquis Banking Group plc Annual Report and Accounts 2023
17
Governance Financial statementsStrategic Report Shareholder information
Community Foundation overview
Our Purpose and values of caring about people, pulling
together as a team, finding a better way and getting the
right things done have their roots in the heritage of our
Company which was founded by Joshua Waddilove in 1880.
They underpin our long-standing commitment to champion
the communities we serve and, in particular, support and
empower children and young people.
The Vanquis Banking Group Foundation
We support the communities we serve through the Vanquis
Banking Group Foundation which we launched in June 2023.
This Company-led Foundation aims to improve the lives of
children and young people in the communities where our
customers live and work by providing them with access to
education, social and financial inclusion, and economic
development opportunities.
Our vision for the Foundation is to build a future where every
child and young person in the UK is supported to achieve their
full potential, contributing to a brighter future. Our mission is
to improve the lives of children and young people by providing
educational and social development opportunities which
support financial and social inclusion. This mission is aligned
with the five UN Sustainable Development Goals that relate to:
No Poverty, Quality Education, Gender Equality, Decent Work
and Economic Growth, and Reduced Inequalities.
The Foundation will address the root causes of financial
exclusion by focusing on three key strategic pillars:
Education Community Financial inclusion
We back programmes that boost literacy
and numeracy rates and offer insights into
the world of work and the skills needed to
secure opportunities.
We support social and financial inclusion in
the communities where we operate.
This work supports our customers and
other consumers to make the most of their
financial options.
The methodology we use for reporting on community investment aligns with the B4SI framework, which is a recognised global
standard in measuring and managing corporate community investment. In 2023, we invested £1.4m in the communities we
serve via the Vanquis Banking Group Foundation.
Education
We support programmes to boost the literacy and numeracy
of children, young people and other groups, and offer them
insights into the world of work and the skills that will help them
secure opportunities, including employment.
National Numeracy – The Group has been a supporter
of National Numeracy since 2018, supporting the National
Numeracy Day campaign for six years. In 2023, National
Numeracy Day was held on 18 May and celebrated the
importance of numbers in everyday life and inspired children
and adults to improve their numeracy skills in their lives at
home, work and school. Along with inspiring almost 830,000
actions to improve number confidence and skills in May alone,
the campaign led to 16,854 downloads of National Numeracy
resources, a 70% increase on 2021. In addition, eight colleagues
have volunteered as part of the charity’s volunteering
programme and the Group is a member of the charity’s
Leadership Council.
School-Home Support – The funding we provide to School-
Home Support enables its practitioners to provide advice and
support to families in Bradford and Kent, enabling them to
access vital support with bills, gain employment and, crucially,
get children in school and ready to learn. In 2023, the charity
supported 133 individuals via intensive casework support
and worked with 269 individuals that benefited from early
response support.
The average school attendance increased by 11.7%. We
also provide funding to School-Home Support and another
partner, the Dixons Academies Trust, to deliver our School
Uniform Project. In 2023, this project provided funding to over
1,000 families in Bradford, Blackpool, Liverpool, London and
Manchester, so that they could access essential items of
school uniform for their children, ensuring that they did not
lose out on their education because they could not afford to
buy it. In September, we were able to host their annual staff
conference in our Bradford head office.
Ahead Partnership – A group of students from New College
Bradford, who were all taking IT and business-focused courses,
took part in our new mentoring programme facilitated by the
Ahead Partnership. The programme comprised five sessions,
developed to support these young people in thinking about
their next steps for their futures. The sessions included:
meeting colleagues from different functions and levels in
the business during a tour of our Bradford offices; a careers
speed networking session; goal setting and actions planning;
interview preparation and practice; and help with where to
look for and apply for jobs. Their mentors also supported them
in developing an app idea that would encourage people aged
16-18 to save money and led to the development of a ‘Design
an app’ day at the request of the students.
2023
2023 community investment figures
2022
Cash £1,152,579
Management costs £169,231
Value of colleague time £62,225
Total £1,384,035
Cash £1,221,822
Management costs £156,592
Value of colleague time £21,132
Total £1,399,546
Vanquis Banking Group plc Annual Report and Accounts 2023
18
Strategic Report
Sustainability continued
Community
Through our community foundation partners, we aim to
help to address the wide range of social and financial
inclusion issues that are relevant to our customers and the
communities where we operate.
Community foundations: we currently have community
foundation partnerships with Bradford District Community
Foundation, Hampshire and Isle of Wight Community
Foundation, Kent Community Foundation and London
Community Foundation to support investment in the
communities that are close to our main business premises.
By working with our community foundation partners, we
have the confidence that we are directing our funding to
the places where it is needed the most. In 2023, through our
four partnerships in Bradford, Kent, London and Hampshire,
we provided grants totalling £236,270 to 30 grass roots
community organisations. The grants will help organisations
to address a wide range of complex issues, such as reducing
inequality, exclusion and disadvantage for children and young
people. The organisations we’ve supported this year include:
– Level Up, Gosport – our funding will help to deliver work
placements for young people aged 18-25 who have
additional support needs. The work will take place in
Gosport and aims to reach 48 young people facing
challenging lives.
– Bangladeshi Youth Organisation, Bradford – our funding
will support Aspire 2 Success which will engage children
and young people from the disadvantaged Manningham
and City wards, including new arrival refugees and
children from the more established BAME community, who
are ‘at risk’ of falling behind and not realising their true
potential, to deliver a training development programme
to raise their aspirations.
– Youth Resilience UK – our funding will help to support
the continuation of services across Medway, Swale and
Thanet, working with disengaged young people, either as
an intervention measure within their school if the individual
is at risk of exclusion or at an alternate education provision
post-exclusion. This will include a broad range of services,
including counselling, peer-support training programmes,
mental health support and raising awareness about the
dangers and impact of crime and substance misuse.
– Family Friends, Brent – our funding will support the
provision of a dedicated family connector and volunteer
network to lead on the delivery of family befriending
in Brent, including navigating financial struggles,
housing insecurity, mental health concerns, and
educational obstacles.
Fundraising
Throughout 2023, our colleagues raised funds for many
causes that are close to their hearts. They have also
generously supported relief efforts from the devastating
earthquakes in Morocco, Turkey and Syria, and flooding
in Libya. This was done through the appeals coordinated
by the Disasters Emergency Committee. The funds raised
by colleagues were then matched by the Group.
Financial inclusion
We fund a range of money advice and debt management
organisations to support the delivery of financial education
to children and young people, and debt advice to our
customers and other consumers.
The Money Charity – we have supported The Money Charity
for over a decade. The charity’s vision is that everyone
achieves financial wellbeing by managing their money,
and it works towards this by delivering products and services
that provide education, information and advice to people
in education, workplace and community settings. Over the
past 10 years, our support has enabled The Money Charity
to deliver 2,478 workshop hours to over 57,000 children and
young people. Throughout 2023, The Money Charity delivered
32 workshop hours to over 2,700 children and young people
in Yorkshire, Greater Manchester, Merseyside and the West
Midlands. Over a third of these workshop hours were targeted
at groups of ‘disadvantaged’ young people, due to an above
average percentage of the young people who go to the
school/college receiving free school meals, or because the
group of young people have another specific vulnerability.
In addition, our support enabled The Money Charity to deliver
36 workshop hours to 228 adults in a range of groups including
those who are at risk of or experiencing homelessness, care
leavers, refugees, and people with disabilities.
Volunteering
We encourage our colleagues to give up their valuable time
to support the projects they care most about as well as
the communities that are supported by the Group. In 2023,
colleagues volunteered 1,696 hours to support community
projects. This compares to the 1,014 hours volunteered by
colleagues in FY22. For example, during 2023, colleagues
from our Customer Experience, Marketing and Data and
Analytics teams volunteered to support two projects. Sixteen
colleagues from our vehicle finance business took part in a
team challenge at the Southsea Green Community Garden
in Portsmouth and rebuilt old and broken raised beds,
refurbished an overgrown memorial garden, built a new shed
and undertook a general garden tidy-up. Eighteen colleagues
from our Cards business spent two days at the Wellgate
Community Farm in Romford and painted farm buildings and
fencing, and cleared land to make way for new animals.
Community Foundation overview continued
Vanquis Banking Group plc Annual Report and Accounts 2023
19
Governance Financial statementsStrategic Report Shareholder information
The Group recognises that failure to take action on climate change not only poses a significant threat to society at large and
the global economy, but also to the day-to-day operations of our business and the lives of our customers, colleagues and other
stakeholders. We know that we have an important role to play in tackling climate change, and it is the responsibility of businesses and
organisations from all sectors to reduce the carbon intensity of their activities in order to mitigate and prevent further climate change.
Our commitment to achieve net zero GHG emissions by 2040 (in respect of our scope 1, 2 and 3 GHG emissions) is ahead of the UK
Government’s net zero by 2050 target, and has been further strengthened by the carbon reduction targets we set in 2023 and which
have been approved by the Science Based Targets initiative (SBTi) (see page 28 for more information).
Climate-related financial report summary
The climate-related financial report set out below is fully consistent with the four pillars and 11 recommended disclosures of the
TCFD. In doing so, Vanquis Banking Group complies with the FCA’s Listing Rule 9.8.6R(8). The report also meets the requirements of
the Climate-related Financial Disclosure (CFD) Regulations 2022 and the UK Companies Act (that is, sections 414CB(2A)(a to h). Our
2023 report is organised around the 11 TCFD recommended disclosures. Reference is also made to the parts of our report that
comply with the specific sections of the CFD Regulations.
Governance
The Group has developed robust governance and management structures, which includes appropriate processes and controls
at the most relevant levels within the organisation to effectively manage the climate risks we face and to ensure we meet any
reporting requirements. We believe that these structures are proportional to the nature and scale of our business operations,
allowing the Board, its committees and the senior management team to assess, manage and report climate-related risks and
opportunities, as well as monitor and provide rigorous challenge to the Group’s progress against the goals and targets that have
been set in relation to the climate change agenda.
1
Board oversight of climate-related risks and opportunities
(section 414CB(2A)(a))
The Vanquis Banking Group plc Board has ultimate accountability for all risks, including climate-related risks and opportunities.
It also has overall accountability for the delivery of the Group’s ESG strategy and regularly reviews performance in accordance
with this strategy. The Board fulfils this accountability by receiving regular updates at its meetings. It is also supported by the
Board’s Customer, Culture and Ethics (CCE) Committee and Audit Committee.
The CCE Committee provides oversight of the Group’s approach to managing and reporting its impact on the environment,
which includes considering climate-related impacts on strategy, major plans of action, and business plans as well as setting the
organisation’s performance objectives, monitoring implementation
and performance. The process in place that enables the CCE
Committee to oversee the climate-related risk agenda and its application to the Group and its stakeholders, involves submitting
papers to its members for discussion and approval. The Audit Committee, which provides oversight of, and approves, the non-
financial performance information that is included in the Group’s Annual Report and Financial Statements, reviews and approves
the content of the Group’s climate-related financial report (see below).
Governance and management of climate risks and opportunities
Structure Activities undertaken in 2023
Board
As a minimum, an annual review of the Group’s climate change objectives as part of a broader review of the
Group’s Purpose/ESG strategy.
CCE Committee
Two updates were provided to this Committee in 2023 which enabled members to oversee the Group’s
ongoing compliance with the FCA’s Listing Rule to ensure that its report was consistent with the
recommendations of the TCFD, monitor the progress being made in developing the SBTi-approved carbon
reduction targets that will be set for the Group, and assess the climate-related metrics that are included in
the remuneration scorecard for executive directors.
Audit Committee
Annual review and scrutiny of the Group’s annual climate-related financial report.
Executive Committee
The ExCo has, as a minimum, an annual discussion on the Group’s ESG strategy, including an update on any
climate change objectives. The Committee also reviews and approves any carbon reduction targets and the
content of the Group’s climate-related financial report.
Climate Risk
Committee
Meets at least three times a year and provides guidance and direction for the assessment and management
of climate change-related risks and opportunities that are material to the Group and its stakeholders.
Climate/Environmental
working groups
These groups work closely with the Sustainability team to deliver activity to support the Group in meeting
stated targets/metrics and to comply with reporting requirements.
Sustainability team
Responsible for the ongoing management of the Group’s sustainability activity, including on climate-related
matters. The team coordinates the work required to set targets/metrics, ensure compliance with reporting
requirements and support the wider business to meet targets/metrics.
Climate-related financial report
Vanquis Banking Group plc Annual Report and Accounts 2023
20
Strategic Report
Sustainability continued
Climate-related financial report continued
2
Management’s role in assessing and managing climate-related risks
(section 414CB(2A)(a))
Vanquis Banking Group’s CEO, with support from the Executive Committee, provides management oversight of the progress being
made by the Group in managing its strategic ESG objectives, including those that relate to climate change. The cross-functional
Climate Risk Committee (CRC) provides guidance and direction for the assessment and management of climate change-related
risks and opportunities that are material to the Group and its stakeholders to support the Group’s ongoing compliance in meeting
the recommendations of the TCFD. During 2023, the CRC supported the Group’s scenario analysis work and the setting of the carbon
reduction targets that were submitted to the SBTi for approval in June 2023.
Knowledge and skills
The Group ensures that its Board and senior leadership team have the requisite knowledge and skills that will help us build a business
that will prosper by responsibly helping our customers, while growing sustainably and profitably. Members of our Board have
experience on a range of sustainability issues. They are also able to add to this by accessing resources on the ESG agenda via our
Board reporting portal or through specific programmes that are delivered by, for example, the Corporate Governance Institute. We
also have a number of sustainability experts within our senior management team. For example, members of the Group’s Climate Risk
Committee regularly attend briefings that are delivered by our advisors or third parties such as the UN Global Compact Network UK.
Remuneration
The remuneration of our executive directors is partly linked to our progress in meeting climate risk-related reporting requirements and
working towards the setting of longer-term carbon reduction targets, via their annual bonus plan. There is also an ESG underpin in the
Group’s Restricted Share Plan (RSP), whereby awards are granted annually to executive directors in the form of conditional awards or
options. For more information, refer to the Directors’ Remuneration Report on pages 93 to 115.
Strategy
Our strategy is to ensure that climate-related risks are integrated into our business strategy and decision making in areas
such as operational resilience, customer service, and supply chain management, and, where appropriate, capital allocation.
Our net zero by 2040 long-term target, along with the medium-term SBTi-approved carbon reduction targets that were set
on 30 January 2024, and our evolving transition plan, set out how, and in which areas, we will reduce the GHG emissions of
our operations and supply chain (see page 26 for more information).
3
Identification of climate-related risks and opportunities over the
short, medium and long term (Section 414CB(2A)(d))
In this section, we identify climate-related risks and opportunities which have potential to impact our business over the
short-term (zero to one year), medium-term (one to five years) and long-term (five or more years) time horizons. These
time horizons are consistent with other risks that we manage, however, we acknowledge that the time horizon over which
climate-related risks will manifest themselves may be a significantly longer time horizon than we experience with other risk
types. We continue to assess the potential of material climate-related risks and opportunities to impact our business, as well as
the resilience of our strategy and stakeholders to such impacts, using scenario analysis. This involves: identifying risk scenarios,
linking the impacts of the scenarios to financial risks, assessing any sensitivities to those risks, and extrapolating the impacts
of those sensitivities to calculate an aggregate measure of exposure and potential losses. In doing so, we use two major risk
categories: physical risks (which include acute, extreme weather events, and chronic, long-term climate shifts), and transition
risks (which relate to regulatory changes, technological innovations and customer demand changes that may occur while
transitioning to a low-carbon economy).
Our scenario analysis makes use of the Group’s financial forecasts, operational footprint, customer data, supply chain
information and environmental data, to create a representation of Vanquis Banking Group. To support our analysis, climate
scenarios of the Network for Greening the Financial System (NGFS) have been adopted when assessing our risks, which
categorise climate scenarios into three transition types: Orderly, Disorderly, and Hot House World.
Scenarios
NGFS Net Zero 2050 (Orderly)
Global warming is limited to 1.5°C through the
introduction of stringent climate policies and
innovation, reaching net zero CO
2
emissions
globally around 2050. Carbon Dioxide Removal
is used to accelerate the decarbonisation but
kept to the minimum possible and broadly in line
with sustainable levels of bioenergy production.
Physical risks are relatively low but transition
risks are high. Therefore, we have selected this
scenario as it aligns with the Group’s ambition to
achieve net zero GHG emissions by 2040.
NGFS Fragmented World (Disorderly)
This scenario illustrates the adverse
consequences of delayed and divergent
climate policy ambitions globally which
lead to high physical and transition risks.
Countries without net zero targets follow
current policies, while other countries
achieve them only partially (e.g. 80% of the
target). Climate scenarios in the Disorderly
case can limit warming to <2°C resulting
in low physical risks but may demonstrate
higher transition risks compared to the
Orderly case.
NGFS Current Policies (Hot House World)
This scenario assumes that only currently
implemented climate policies are
maintained, with no further strengthening.
Global greenhouse gas emissions
grow until 2080, leading to about 3°C of
warming and irreversible changes such
as higher sea level rise. It is considered
to be best suited to assessing physical
risks according to the NGFS and has been
selected given that there is a potential
for the Group to be impacted by the
climate-related physical risks.
Vanquis Banking Group plc Annual Report and Accounts 2023
21
Governance Financial statementsStrategic Report Shareholder information
The climate-related risks and opportunities which have potential to impact our business in the short, medium and long term are
set out below:
Risk/opportunity Impact on business Time horizon(s)
Physical risk (acute)
Extreme weather events (e.g. heavy rain, high wind and heatwaves) may disrupt/
damage our facilities, direct or indirect supply chain operations and result in
negative financial, operational or reputational impacts. The long-term success
of the business is dependent on the protection of our colleagues, customers, and
business infrastructure and processes. More frequent and severe weather events
could pose a threat to these critical assets.
Short and
medium term
Physical risk (chronic)
Long-term changes in climate and weather patterns (e.g. changing annual
rainfall levels, mean temperatures increases and rising sea levels) could disrupt
our facilities, direct or indirect supply chain operations and result in negative
financial, operational or reputational impacts.
Long term
Transition risks (policy
and legal)
New or additional climate-related laws, regulations or contractual commitments
(e.g. those that apply to energy usage, business travel or GHG emissions) may
result in increased compliance costs, taxes on emissions, penalties or restrictions
that relate to our business models.
Medium
and long term
Transition risks
(reputation)
Our customers, colleagues, investors and regulators expect us to take
appropriate measures to reduce our contribution to climate change. Our brand
is essential to the growth and success of our business. Damage to our reputation
as a result of poor environmental performance, including the failure to meet our
climate-related commitments (e.g. our net zero by 2040 ambition) or regulatory
expectations, could result in negative media attention and may impact customer
or investor demand or result in a loss of existing talent or the inability to attract
new talent.
Short, medium
and long term
Climate-related
opportunities (product
and services)
There is an opportunity for us to develop a new business model that introduces
new products to our customers which accommodate their needs and meets
emerging climate-related policies (e.g. to enable our vehicle finance customers
to purchase battery electric vehicles (BEVs)).
Medium
and long term
Climate-related
opportunities
(resource efficiency
and resilience)
We continually identify opportunities to invest in improving the energy efficiency
of operations and infrastructure, ensuring that they are resilient. This not only
helps us to manage our risks but also to reduce operating costs.
Short, medium
and long term
4
The impact of climate-related risks and opportunities on our
businesses, strategy and financial planning (section 414CB(2A)(e))
In analysing the results of our scenario analysis, we have used high, medium and low financial impact categories, to represent
the estimated loss to the Group’s revenues over the next five years assuming that no mitigating action is taken. These categories
are used within our Risk Management Framework.
The guidance for banks published by the TCFD in 2021 requires us to disclose information on significant concentrations of credit
exposure to carbon-related assets. It is suggested that the vehicle finance business of Vanquis Banking Group is more susceptible to
the risks associated with climate change. In particular, the transition risks associated with the introduction in the UK of a total ban on
the sale of new petrol and diesel cars and vans. However, this ban has been pushed back five years from 2030 to 2035.
The Group’s credit exposure to the assets that are purchased through the loan products that our vehicle finance business
offers, continues to be considered limited, given that the vehicle finance we offer is typically on three to five-year secured
hire purchase contracts. We also continue to monitor the list price of used electric vehicles (which continues to be a barrier to
ownership for many of our customers) and explore the development of new finance products that will enable our customers to
transition from internal combustion engine cars to hybrid vehicles or battery electric vehicles (BEVs).
Vanquis Banking Group plc Annual Report and Accounts 2023
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Strategic Report
Sustainability continued
Climate-related financial report continued
4. The impact of climate-related risks and opportunities on our businesses, strategy
and financial planning (section 414CB(2A)(e)) continued
The table below shows the scenarios that the Group has selected and their overall level of physical and transition risks which are
driven by the level of policy ambition timing, coordination and technology levers as stated by the NGFS.
Physical risks Acute risks Chronic risks
Scenario Orderly Disorderly Hot House World
NGFS Net Zero 2050 NGFS Fragmented World NGFS Current Policies
Description
In this scenario, physical risks
encompass extreme weather
events and rising sea levels, posing
threats to infrastructure, agriculture,
and ecosystems globally. Current
temperatures are high due to the
continued emission of GHGs since
the industrial revolution, resulting
in a global temperature increase
between 1 and 2°C. However, in this
scenario, the global community aims
to limit temperature increases to
well below 2°C above pre-industrial
levels, fostering a more stabilised
climate and reducing the intensity of
temperature-related impacts.
In this scenario, physical risks
intensify, leading to increased
GHG emissions and exacerbated
climate-related challenges. The
NGFS scenarios suggest that current
temperatures are elevated due to
ongoing GHG emissions, contributing
to a global temperature increase
of 1 to 2°C. This scenario anticipates
more frequent and severe extreme
weather events, disproportionately
affecting vulnerable regions. The
lack of global collaboration implies
higher GHG emissions, contributing
to significant temperature increases
and associated impacts on
a global scale.
In this scenario, physical risks include
the continuation of current trends such
as more frequent heatwaves, changing
precipitation patterns, and disruption
to ecosystems. Current temperatures
are high due to ongoing GHG emissions,
resulting in a global temperature
increase of 1 to 2°C. Without substantial
measures beyond current policies to
reduce emissions, temperatures are
expected to rise further. The scenario
projects global warming of 1.5°C by the
2030s, 2°C by around 2050, and 3°C by
the 2090s. These temperature increases
could lead to strong exposure to natural
hazards and acute as well as chronic
climate-related risks due to insufficient
efforts to curb temperature increases.
Risk rating
by NGFS
Low Medium High
Financial
impact/risk
to Group
1
Low Low Medium
Time horizon
Short and medium term Medium and long term Long term
Impact
In this scenario, there is likely to
be an increase in the instances
of extreme weather events such
as heavy rain, high wind and
heatwaves. The impacts of these
events are likely to be minimal.
While climate-related physical risks
also increase in this scenario, the
impact caused by, for example,
extreme weather patterns, is much
smaller than in the Hot House
World scenario. This is because
this scenario assumes that global
climate policies are somewhat
more successful in lowering global
emissions, which mitigates the most
extreme changes in the climate. This
is likely to result in more vulnerable
parts of the world being exposed
to the impacts of the long-term
changes in climate and weather
patterns. In the UK, there would likely
be significant regional variability
in flooding impacts but it should
be noted that, according to the
Flood Re scheme, large areas of the
country are not materially impacted
by flood risk. However, it is likely
that this scenario would result in
more instances of extreme weather
events, such as heavy rainfall and
high winds, which could disrupt work
environments and routines.
The greatest impact in physical risk
is seen in this scenario as the cost of
damage caused by inland and coastal
flooding, high winds and subsidence
is expected to increase as the global
mean temperature rises. This could
pose a significant threat to the Group’s
properties and infrastructure which,
in turn, could impact our insurance
or reinsurance costs, as insurance
companies could face higher payouts
due to climate-related damages. This
scenario could also have greatest
consequences in terms of colleagues’
productivity as extreme weather events
may disrupt work environments and
routines which could have implications
for our customers.
1 High - A loss impacting the profit and loss statement by more than 20% and/or by more than £20m.
Medium - A loss impacting the profit and loss statement by between 10% and 20% and/or between £5m and £20m.
Low - A loss impacting the profit and loss statement by between 5% and 10% and/or by between £1m and £5m.
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
Mitigation:
The Group will adopt the following actions in order to mitigate against these physical risks and ensure that our strategy responds
to any potential opportunities:
– continuing to maintain and test business continuity plans to ensure the continuity of our operations in a range of situations,
including those where an extreme weather event occurs; and
– shifting to more sustainable, low-impact resources and having a series of targets to achieve this aim (for example, to ensure
that we use 100% renewable energy across the Group).
In terms of Vanquis Banking Group’s exposure to physical risks, although it is accepted that extreme weather events will increase
in number and severity compared to the present, they are unlikely to be as severe as those expected under the ‘Current Policies’
scenario. Also, the direct financial impacts associated with these events are considered to be minimal for the Group because
its four main offices are leased, and insurance is in place to help mitigate the impacts of such physical risks.
Transition risks Policy and legal risks
Scenario Orderly Disorderly Hot House World
NGFS Net Zero 2050 NGFS Fragmented World NGFS Current Policies
Description
The scenarios provided by the NGFS use three different models to provide estimates of uncertainty. In the medium term,
the amount of CO
2
emissions under the ‘Current Policies’ scenario differs considerably. There are also different estimates
for when net zero CO
2
emissions must be reached in order to limit warming to 1.5°C. A significant shift towards emissions-
neutral alternatives in all sectors is needed to replace fossil fuels and carbon-intensive production and consumption. In
order to facilitate this transition, policymakers will increase the implicit cost of GHG emissions. In the meantime, climate
policies may result in higher costs due to the prolonged development and deployment of alternative technologies.
According to the NGFS scenarios, higher carbon emissions imply strict policies, and a carbon price of around $160 per
tonne would be needed by the end of the decade to encourage a transition to net zero by 2050. Moreover, governments
are enforcing strict policies which bring different costs and benefits.
Risk rating
by NGFS
Medium High Low
Financial
impact/risk
to Group
1
Low Low Low
Time horizon
Medium and long term Long term Medium and long term
Impact
This scenario assumes a decline
in total global GHG emissions with
advanced economies leading the
way, met through a combination of
rapid deployment of clean energy
technologies, energy efficiency
and demand reduction. As carbon
removal costs are predicted to
increase to accelerate the transition
to a net zero economy, the Group
may be at risk of achieving its
ambition to be net zero by 2040 due
to the rise of cost in carbon removal
strategies. Further, the ongoing
implementation of the carbon pricing
described above might result in
increased costs associated with our
operations and travel and transport.
Both these could contribute to
decreasing the Group’s revenues.
This scenario assumes delayed and
divergent climate policy ambition
globally, leading to elevated
transition risks in some countries and
high physical risks everywhere due
to the overall ineffectiveness of the
transition. In these circumstances,
carbon prices and amounts of
investment are different across
geographies, with some countries’
ambitious efforts being undermined
by limited action in some others.
At the same time, climate policies
differ significantly across sectors;
the transport and buildings sectors
experience carbon prices three times
as high as the rest of the economy.
The combination of these misaligned
efforts across countries and sectors
leads to higher transition risks which
could contribute to decreasing the
Group’s revenues.
In this scenario, we would not see
the impact of transition risks, but
we would expect to see the impact
of physical risk in the long term. As
discussed above, we would expect an
adverse overall economic outcome,
but do not consider it possible to
accurately quantify these impacts.
1 High - A loss impacting the profit and loss statement by more than 20% and/or by more than £20m.
Medium - A loss impacting the profit and loss statement by between 10% and 20% and/or between £5m and £20m.
Low - A loss impacting the profit and loss statement by between 5% and 10% and/or by between £1m and £5m.
Vanquis Banking Group plc Annual Report and Accounts 2023
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Strategic Report
Sustainability continued
Climate-related financial report continued
4. The impact of climate-related risks and opportunities on our businesses, strategy
and financial planning (section 414CB(2A)(e)) continued
Transition risks Reputation risks
Scenario Orderly Disorderly Hot House World
NGFS Net Zero 2050 NGFS Fragmented World NGFS Current Policies
Description
Reaching net zero by 2050 is the core driver of the transition risks that the NGFS describes in its scenarios. Firstly, NGFS
explains that decarbonising energy is the fundamental key of the transition to a net zero carbon economy. This will
necessitate the switching to alternative sources of energy such as solar, wind or nuclear, as well as the deployment
of carbon, capture and storage (CCS). In addition, deployment of Carbon Dioxide Removal (CDR) technologies will
compensate for the GHG emissions by removing carbon from the atmosphere.
Risk rating
by NGFS
Low Medium Medium
Financial
impact/risk
to Group
1
Low Low Low
Time horizon
Short, medium and long term Medium and long term Medium and long term
Impact
As the Group is committed to
reaching net zero by 2040 by
equalising or lessening the emissions
that are emitted into the atmosphere,
there could be a potential risk
imposed to the Group’s reputation
and costs in the short, medium
and long term. Damage to our
reputation from poor environmental
performance, including the failure
to meet our climate-related goals,
could impact customer or investor
demand or result in a loss of existing
talent or the inability to attract new
talent. Failure of the Group to deliver
or sufficiently drive change through
our net zero by 2040 target in this
scenario could result in these risks
being realised.
In these scenarios, as mentioned above, it is expected that global climate
policy ambition would be divergent and/or delayed. This could lead to
negative media attention or changes in consumer, colleague, investor and
other stakeholder preferences which could contribute to reducing the Group’s
revenue and/or market share. However, it is anticipated that these impacts
could take longer than the NGFS Net Zero 2050 scenario to be realised or could
be generated by specific stakeholders or in specific locations (e.g. within the
Group’s supply chain).
1 High - A loss impacting the profit and loss statement by more than 20% and/or by more than £20m.
Medium - A loss impacting the profit and loss statement by between 10% and 20% and/or between £5m and £20m.
Low - A loss impacting the profit and loss statement by between 5% and 10% and/or by between £1m and £5m.
Mitigation:
The actions the Group will adopt in order to mitigate against these transition risks and ensure that our strategy responds to any
potential opportunities include:
– continuing our net zero target by 2040 journey by continuing to adopt sustainable energy sources, implement energy
efficiency measures and engage with our suppliers to encourage them to reduce their own carbon emissions;
– delivering on our SBTi-approved carbon reduction targets;
– continuing to engage with our customers on the benefits of using our vehicle finance products to purchase BEVs/hybrid
vehicles. At the same time, engaging with our stakeholders to gain further insight into the used BEV market and the current
state of the charging infrastructure in the UK;
– continuing to monitor customer default rates due to increased costs (e.g. as a result of energy cost increases); and
– ensuring that the remuneration of the executive directors is partly linked to our progress in meeting the Group’s
climate-related goals and targets.
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
Climate-related opportunities
We continue to explore opportunities that will enable us to introduce new products to our customers which accommodate their
needs and meets emerging climate-related policies (e.g. to enable our vehicle finance customers to purchase battery electric
vehicles (BEVs) or hybrid electric vehicles). However, the affordability of BEVs continues to be the main barrier to ownership for
the Group’s vehicle finance customers. The average loan amount for our vehicle finance customers stood at £8,525 in 2023.
BEVs are still more expensive than their petrol and diesel counterparts, and there is an insufficient range of affordable BEVs on
the market. Of the 111,671 ‘live’ customers that are served by our vehicle finance business, 274 have purchased a BEV car, and 16
a BEV light commercial vehicle. Take-up of BEVs is also influenced by the ability of our customers to access a reliable charging
infrastructure. According to a House of Lords Committee report on the current state of the BEV industry, up to 40% of households
do not have off-street parking at home and thus are entirely reliant on public charging. The availability of public charge points
across the UK is highly variable, and the Government has missed its targets for motorway charge points. This means that many
consumers face considerable anxiety around whether, and where, they will be able to charge BEVs reliably, affordably, and
quickly, and around the battery range of second-hand cars.
We also continue to identify opportunities to introduce energy efficiency initiatives across the Group. We continue to do this
through the environmental management system (EMS) we have in place at our Bradford head office, and premises in London,
Chatham, Kent and Petersfield, Hampshire.
5
The resilience of our strategy, taking into account different
climate-related scenarios (section 414CB(2A)(f))
Our sustainability strategy focuses on our customers, colleagues, suppliers, the communities we serve and the environment,
and supports us to deliver strong Company performance. This means that climate change and how our business and key
stakeholders respond and adapt to it is an important part of our sustainability strategy.
The analyses we have undertaken to date, and which are set out above, show that the policy and legal risks, and reputation
risks associated with the transition to a low-carbon economy, as well as the physical risks associated with climate change are
most material to our business activities and key stakeholders and therefore have potential to impact the Group in the short,
medium and long term. While our internal processes determined that these risks are not likely to have a material impact on
our business over our stated time horizons, we nonetheless maintain robust mitigation strategies to improve our resilience to
the impacts of climate change. The NGFS Net Zero 2050 scenario would have the biggest impact on the Group in the short to
medium term before any mitigating actions were considered or taken into account. This is primarily due to the potential for
increases in the price of carbon to have an impact on the cost of our energy use, business and other operating costs. The NGFS
Fragmented World scenario reveals higher levels of disruption as a result of increases in extreme weather events and other
natural disasters compared with the NGFS Net Zero 2050 scenario. However, the actions and an outline transition plan that are
set out above, will enable the Group to address any of the concerns associated with these scenarios as they will contribute to
reducing our exposure to both transition and physical risks. Under the NGFS Current Policies scenario, despite there being much
uncertainty about the impacts of climate change, we can expect our business and our stakeholders to be impacted by more
extreme physical risks in the longer term, as well as lack of policies to support the transition to a low-carbon economy. In these
circumstances, the Group would have to ensure that adequate measures were in place to manage and address the physical
risks and their potential to impact our operations, customers and other stakeholders.
We continue to use climate modelling and scenario analysis to ensure that our strategy of understanding and assessing the
risks associated with climate change and the impact on Vanquis Banking Group’s financial results continues to evolve so that we
can further improve our resilience and respond to any related opportunities.
In preparing the Group’s financial statements (see page 124 to 128), we have considered the impact of the results of our scenario
analysis and climate-related risks on our financial performance, and while the effects of climate change represent a source of
uncertainty, there has not been a material impact on our financial judgements and estimates due to the physical and transition
climate-related risks in the short to medium term.
6
Our processes for identifying and assessing climate-related risks
(section 414CB(2A)(b))
We have an established Group Risk Management Framework to identify, assess, mitigate and monitor the climate-related risks
and opportunities we face as a business. As with all principal risks, and any sub-category risks, this Framework sets out the high-
level policy requirements and control principles that are in place and those responsible for managing both the overall risk and
the relevant mitigating controls (see pages 19 to 24 for more information). In the Group’s newly agreed risk classifications, climate
risk sits under strategic performance principal risk 12 as a sub-category (12.3). This is because the Group’s long-term success
is dependent on the sustainability of its operations and business models, and the resilience of its supply chain. By integrating
climate risk within our Framework, it is possible to assess how it interacts with other material principal risks, including those that
relate to credit, capital, operations, legal and governance matters and conduct and regulations. All risks are monitored and
reviewed throughout the course of the year to identify changes that could impact the risk profile.
Vanquis Banking Group plc Annual Report and Accounts 2023
26
Strategic Report
Climate-related financial report continued
7
Our processes for managing climate-related risks
(section 414CB(2A)(b))
The Group’s cross-functional CRC supports the embedding of the risk management approach for identifying and assessing
climate-related risks and mitigating controls. The CRC continues to recommend that a ‘risk cautious’ appetite for exposure
to climate risk is adopted and supports the implementation of a control framework that prevents significant customer or
stakeholder detriment, regulatory non-compliance and/or reputational damage as a result of climate change. By undertaking
scenario analysis, the CRC has been able to quantify climate-related risks that are material to Vanquis Banking Group and carry
out an initial evaluation of their size, scope and impact. This has enabled the CRC to better understand and prioritise any risks
and assess the resilience of the Group’s strategy and operations to potential climate-related impacts. The Group’s approach to
the ongoing management of climate-related risks is supported by a number of processes. These include: monthly risk appetite
reporting using metrics which to relate carbon pricing, customer default rates, operational impacts associated with extreme
weather events and the progress being made in relation to our net zero target, and a risk control self-assessment (RCSA) process
for climate risk which enables us to identify, analyse and understand the related controls that are in place, and to evaluate these
against our risk appetite and the desired risk levels, to determine whether any improvements need to be made. Regular updates
are also provided to the Board’s Risk Committee on the progress made in terms of delivering mitigating activities which relate to
the Group’s climate risk.
8
How our processes for identifying, assessing and managing
climate-related risks are integrated into our overall approach
to risk management (section 414CB(2A)(c))
Climate-related risks and opportunities are integrated within our Enterprise Risk Management Framework and are continually
monitored. This enables us to continuously evaluate the significance of our risks based on their likelihood and impact and to
prioritise their management accordingly. Through this framework, we also monitor the environment for new and emerging risks,
and to keep up to date with any evolving regulatory requirements. We remain committed to understanding and assessing the
risks associated with climate change and their impact on the Group’s financial results, and will continue to update our approach
to scenario analysis as more business-related, economic and climate data becomes available.
Metrics and targets
The Group has a number of metrics and targets in place to monitor and manage the most significant risks and opportunities
arising from climate change. These are set out on page 28 and are linked to the risks tested as part of the scenario analysis
and the opportunities identified by the Group. A Group-wide view of our energy consumption and greenhouse gas emissions
data can be found below. In addition, we have set SBTi-approved carbon reduction targets in line with the latest climate
science recommendations necessary to meet the goals of the Paris Agreement and limit global warming to 1.5°C, well
below 2°C. Vanquis Banking Group’s GHG emissions data has been subject to a limited assurance by SLR Consulting Limited
in accordance with the ISAE 3000 Assurance Standard. A full assurance statement is available on the Group’s website at
www.vanquisbankinggroup.com.
9
The metrics used to assess climate-related risks and opportunities
in line with our strategy and risk management process
(section 414CB(2A)(h))
Our GHG emissions reduction targets have been updated this year to align with the net zero definition of the SBTi. We submitted
targets to reduce our scope 1 and 2 GHG emissions and to engage with our suppliers to reduce our scope 3, category 1 GHG
emissions to the SBTi in 2023 and these were approved on 30 January 2024.
Our transition plan – a path to net zero by 2040
To deliver on our net zero by 2040 ambition, we have developed an outline plan that will enable us to transition to a low-carbon
economy and deliver in line with the science-based carbon reduction targets.
What has been delivered to date?
How will we reduce our scope 1 and 2
GHG emissions?
How will we reduce our scope 3
GHG emissions?
A reduction in our scope 1 and 2
emissions by 21%.
Movement to 100% renewable electricity
purchased.
A reduction in some of scope 3 emissions
by reducing the emissions associated with
well-to-tank and waste generation.
Reduce absolute GHG emissions via the
introduction of energy efficiency measures
and use of alternative fuels.
Implement behavioural change measures.
Monitor technological developments for
low-carbon solutions.
Work across our supply chain to support
decarbonisation.
Reduce absolute GHG emissions associated
with business travel, colleague commuting,
water use and waste generation.
Continuously monitor developments in the
battery electric vehicle market.
Sustainability continued
Vanquis Banking Group plc Annual Report and Accounts 2023
27
Governance Financial statementsStrategic Report Shareholder information
10
Our scope 1, 2 and 3 GHG emissions and related risks
The Group reports this information in accordance with the UK Government’s Streamlined Energy and Carbon Reporting (SECR)
policy that has been implemented through the Companies (Directors’ Report) and Limited Liability Partnership (Energy and
Carbon Report) Regulations 2018. In doing so, we follow the GHG Protocol Corporate Accounting and Reporting Standard to
calculate the scope 1, 2 and 3 emissions that are material to our operations and business activities. We employ a financial
control approach to account for our GHG emissions and and have used the UK Government Conversion Factors for Company
Reporting (28 June 2023) published by the Department for Energy Security and Net Zero and Department for Business, Energy
and Industrial Strategy.
2023 2022
Scope 1 GHG emissions (CO
2
e)
Gas use 186 142
Diesel and petrol use 15 13
Scope 2 GHG emissions (CO
2
e)
1
Electricity use (market-based emissions) 556 453
Electricity use (location-based emissions) 604 862
Scope 3 GHG emissions (CO
2
e)
Scope 3 associated ‘well-to-tank’ emissions 81 287
Scope 3 category 1 – purchased goods and services
2
20,210 16,420
Scope 3 category 3 – fuel and energy-related activities (not included in scope 1 and 2) 233 332
Scope 3 category 5 – waste generated in operations
3
10 16
Scope 3 category 6 – business travel 688 214
Scope 3 category 7 – employee commuting
4
9,766 2,389
Scope 3 category 13 – downstream leased assets (market based)
5
0 0
Scope 3 category 15 – investments
6
303,846 227,524
Total energy consumed (kilowatt hours) 4,389,415 6,013,939
Scope 1 and 2 (and associated scope 3) emissions intensity ratio (kg of CO
2
e/per customer) 0.59 0.79
1 The market-based emission factors from two suppliers are in CO
2
and not CO
2
e (i.e. do not include non-CO
2
emissions); however, the variance between CO
2
and
CO
2
e is considered to not be material. The supplier emissions factors used in market-based method covers the period 1st April 2022 – 31st March 2023 only.
2
When calculating the suppliers’ carbon emissions using the spend-based method, we used the UK Government Department for Business, Energy & Industrial
Strategy which was published in June 2023 and present data from 2019. However, due to inflation, an inflation rate of £1.23 has been implemented to ensure
accuracy and transparency.
3 In the absence of water treatment volume data for some offices, we have assumed that the water treatment volume is the same as the water supply
volume; this approach results in an overestimate of the water treatment volumes.
4
Employee Commuting to Work emissions (tCO
2
e) are based on the 2023 employee survey. The significant increase in employee commuting emissions is due
to the change in calculations approach. This year environmental factors provided from the UK government have been applied.
5 The market-based method has been used to calculate the GHG emissions associated with an office that is leased by the Group where 100% renewable
electricity is used.
6
The emissions from the vehicles that are financed by the Group are based on the number of live vehicle financial agreements for the 2023 reporting period. The vehicle
emission factors are in CO
2
and not CO
2
e (i.e. do not include non-CO
2
emissions); however, the variance between CO
2
and CO
2
e is not considered to be material.
Vanquis Banking Group plc Annual Report and Accounts 2023
28
Strategic Report
Sustainability continued
Climate-related financial report continued
11
The targets used to manage climate-related risks and opportunities
and performance against targets (section 414CB(2A)(g))
Risk/opportunity-
related category
Aspect Metric Target(s)
1
Policy and legal
GHG emissions
Scope 1, 2 and 3 GHG emissions reporting
and reductions which relate to energy
and water use, business travel and waste
management.
See our environmental KPI results and
GHG emissions table on page 27 of this
report and the ESG data table on the
Group’s website.
Science-based
targets
(SBTi approved)
Carbon reduction. Reduce scopes 1 and 2 GHG emissions by
39.9% by 2028 from a 2021 base year.
78% of suppliers by spend covering
purchased goods and services will have
science-based targets by 2027.
Energy source
Renewable energy
Renewable energy use. Continue to use 100% renewable electricity
across our business premises by
December 2024.
Market
opportunities
Customer
engagement
Customer sentiment and perception
regarding their ability to transition to a low-
carbon economy as well as the Group’s ESG
performance.
Monitor the number of Group customers
using our vehicle finance products to
purchase BEVs and hybrid electric vehicles.
Monitor customer attitudes and
perceptions towards buying BEVs.
Engage with policymakers to support the
uptake of BEVs by consumers in the mid-
cost and near-prime parts of the consumer
credit market.
Reputation
Supplier
due diligence
Monitor supply chain activities in line
with the Group’s ESG commitments
and Corporate Environmental
Management Policy.
See SBTi-approved target above. Also,
engage with 100% of materially significant
suppliers to determine their exposure to
climate risks.
Investor relations
Investor sentiment and perception
regarding the Group’s ESG performance.
Continue to participate in CDP, the
FTSE4Good Index, MSCI, and the S&P Global
Corporate Sustainability Assessment.
Policy/liability
Executive
remuneration
The remuneration of the executive
directors is partly linked to our progress in
meeting the Group’s climate-related goals
and targets.
Please refer to the Directors’ Remuneration
Report on pages 93 to 115.
Physical risks
Weather patterns
Operational impacts caused by
severe weather events and changes in
weather patterns.
Monitor increases in operating costs (e.g.
associated with increased insurance
premiums and potential for reduced
availability of insurance on assets in ‘high-
risk’ locations).
1 These targets are not dependent upon any UK Government policy initiatives that support the reduction of GHG emissions over time.
Vanquis Banking Group plc Annual Report and Accounts 2023
29
Governance Financial statementsStrategic Report Shareholder information
Vanquis credit card customer
Age: 27
Lives with: Partner and three-year-old boy.
Lives in: Three-bedroom semi-detached home in New
Path, Annan.
Job role: Mental Health Nurse working for Dumfries and
Galloway NHS at the local drug and alcohol service.
Likes: Spending time with family and being a mum,
meditation and watching TV.
Perceives credit: As being a necessary back up,
a just in case.
“I’ve lived here all my life, as have my parents and their
grandparents. I’m really close with my family and our
cousins live just a couple of doors down from us.
Everyone is within walking distance, which is nice. I work
part time three days a week and it suits our lifestyle. As a
Mental Health Nurse, I have a caseload and my day-to-
day includes things like treatment reviews, supporting
people suffering from substance abuse. I do home visits
as well as run clinics, but it’s full-on work. There are lots
of people in crisis situations but in my role I get to help
them, care for them and help them learn to care for
themselves. I enjoy helping people and in this job I can
engage with someone and support them to improve
their lives.
Me working three days is the balance we need at the
moment. I get to spend more time with my son, and it
reduces the amount we have to spend on child care
which was around £300 last month. I’m so blessed to
have family close by to help on the other days because
otherwise I wouldn’t have been able to go back to work.
But my little boy gets his free hours soon, so that’ll be
a big help.
It can be difficult managing family life. Occupational
health is helping me get to work and back at the moment
whilst I’m waiting for my licence back following some
seizures I’d had. They’re all under control now, so it’s just
a waiting game. But this has been making things a bit
trickier for us.
When I get my licence back, I’ll be able to take us out and
about on some ‘free’ trips and just get out the house a
bit more. It also means I can spend more time with my
friends – we’ve all got children about the same age, so
it’s nice to go and do things with them on my days off.
I became a Vanquis Credit Card customer about a year
ago. I was initially looking for a balance transfer and
Vanquis were offering six months with no interest. I didn’t
particularly plan on using it too much, but I have used it
on the run up to Christmas and birthdays – and to make
life more manageable.“
Meet
Beth
“ Vanquis has been the backup
we’ve needed when our wages
have run out, but we can’t do
without – and there’s still a week
‘till payday.”
Our customer case studies
30
Strategic Report
Our customer case studies continued
Vehicle finance customer
Age: 27
Drives: Red BMW 116D with a private plate.
Length of agreement with Moneybarn: Three years
and counting.
Lives with: Mum Paula, Dad, three dogs and two kittens
in Selby with a very small garden that has been taken
over by the dogs.
Lives in: A three-bedroom semi-detached council house.
Job role: Swimming teacher who works term times at the
local leisure centre.
Likes: Family time, gym time, road trips, Spotify and
watching The Vampire Diaries.
Perceives credit: As something everyone has (or has
had) an issue with.
“When I left school, I went on to complete a childcare
course at college and I started working as a Lifeguard. My
brother and cousin both started as Lifeguards, too. But
I’m good with kids and wanted to find a role which meant
I could work more directly with children. That’s when I
started my training to become a swimming teacher. I
teach the duckling stages, which is from babies up to
age three and also stages 1-4 for the over four-year-
olds – I do both groups and one-to-one lessons. It’s my
absolute dream job and I’m being trusted to do more
managerial tasks, too, now.
When I’m not at work, I just like to chill. I spend a lot of
time at the gym with my friend, sitting in my comfy chair
listening to Spotify or maybe watching The Vampire
Diaries. My mum is my best friend, we spend a lot of
time together just hanging out – we do pretty much
everything together.
Everyone suffers with bad credit, don’t they? From
making mistakes in the past with past relationships
and things like that – it’s so common. Everyone I know
struggles to get credit.
So when I came to needing a bigger car I went to Walkers,
the garage on the corner, and explained that I’d been
refused finance before.
I did have a Corsa but when me and my boyfriend
started to get more serious, I had to think about the
future and fitting a car seat in as well as a push chair
for his three-year-old boy, AJ. I was needing a bigger
boot and back seat area. The guy at the garage
recommended Moneybarn and a bigger car to me.
I’ve wanted a BMW ever since I was young. Then I got my
private plate – It looks like Niffa, like my other nickname
– as in Jenn-NIFFA!
Moneybarn has been brilliant. They’ve helped me get
the car of my dreams that meets my needs and my
credit rating has improved. I’d still look to use them
again because the customer service is so good, plus
I’ve recommended them to some people.
Whilst I do use my car for work, it mainly gets used for
trips at weekends and out of term time. Most recently
we’ve booked to go see the Blackpool lights and we’ve
got a hot tub holiday coming up, too.”
Meet
Jenn
“ They’ve helped me get the car
of my dreams and even my
credit rating has improved.”
Vanquis Banking Group plc Annual Report and Accounts 2023
31
Governance Financial statementsStrategic Report Shareholder information
Credit card and loan customer
Age: 41
Lives with: Partner and three children (aged 1, 7 and 12)
in Beeston, Nottingham.
Lives in: Three-bedroom semi-detached house in which
her and her partner have shared ownership. It’s the first
home either of them has owned.
Job role: Refugee Worker (Project Manager/Bid Writer),
Town Councillor (as of May ’23) and Founder of the
Broxtowe Community Projects charity.
Likes: Coffee and quizzes with friends and visiting theme
parks. Ellie’s children’s hobbies include climbing, archery
and roller skating.
Perceives credit: As something she’ll only use if it’s
absolutely necessary.
“I came to University in Nottingham and never left. I lived
in Beeston and found work here soon after leaving uni,
and since then I’ve built up my roles in the community
around my work with the church. In my Refugee Worker
role, I’m writing bids and trying to find money to help
the people in the community. There are many refugees
situated in a hotel near to the church and through the
charity I founded in the pandemic, Broxtowe Community
Projects, I’ve been running a local food bank for quite
some time. But I’ve noticed the need is becoming
greater and greater. That’s why I’m looking at setting up
a social supermarket for this community. I’ve found a
space and members will pay £3.50 a week for a value
of approximately £20 worth of food. We’ve also been
running English lessons and we have around 100 people
coming to learn English every week, rising to around 200
students when we run event days.
I first came across Vanquis through ClearScore a couple
of years ago and I thought that a credit card could come
in handy for when I was really stretched. Normally my
credit cards live in a box in the house.
I don’t spend on them casually, it’s always an intentional,
considered, thought-through spend. I like to work out
when I’m able to pay off the credit that I’ve used –
I don’t like revolving debt or even the idea of it. My card
is used always with intent. We’re not poor but we’re not
rich either, so I think it’s just smart to keep a close eye
on finances.
We moved house in February this year. This is the first
home I’ve owned. It’s a shared ownership, so we’ve
bought our share and the rent we’re paying is minimal.
It’s the move that we’ve been using credit for. We’ve
always lived in rented accommodation, so we had to buy
everything – absolutely everything! I initially used my
credit card to pay for the carpets, that was around £400.
But we knew we’d need quite a bit more.
Because I already had the card with Vanquis, we looked
to them to take out a bigger loan. It just works out less
expensive overall that way. My Vanquis loan has paid for
our privacy and our ability to function in our new home.
We’ve bought blinds, the right sized curtains, curtain
poles, loo roll holders. All the things you take for granted
in a rental, we have to pay for all at once and make sure
the children had everything they need to be comfortable
and live life practically.
We spent a bit of the loan on tidying up some smaller
debts but the rest has gone on life’s essentials. The card
and the loan has helped us so much – the move just
wouldn’t have been possible without Vanquis.”
Meet
Ellie
“ Our house move wouldn’t
have been possible
without Vanquis.”
Vanquis Banking Group plc Annual Report and Accounts 2023
32
Strategic Report
Financial review
A business in transition
Income statement
2023
£m
2022
£m
Interest income 556.0 491.5
Interest expense (113.4) (58.8)
Net interest income 442.6 432.7
Fee and commission income 44.2 47.0
Fee and commission expense (1.7) (2.8)
Net fee and commission income 42.5 44.2
Other income 3.7 3.8
Total income 488.8 480.7
Impairment charges (166.1) (66.1)
Risk-adjusted income 322.7 414.6
Operating costs (327.1) (304.5)
Statutory (loss)/profit before taxation from
continuing operations (4.4) 110.1
Tax charge for continuing operations (1.6) (27.8)
Statutory (loss)/profit after taxation
from continuing operations (6.0) 82.3
Loss after taxation from discontinued
operations — (4.9)
Statutory (loss)/profit for the year
attributable to equity shareholders (6.0) 77.4
Add back:
Tax charge 1.6 27.8
Amortisation of acquisition intangibles 7.9 7.5
Exceptional items 21.4 9.0
Loss after taxation from discontinued
operations — 4.9
Adjusted profit before tax 24.9 126.6
Certain alternative performance measures (APMs) have been
used in this report. See pages 189 to 191 for an explanation of
their relevance as well as their definition.
To enhance transparency and understanding of our financial
performance, the Group has taken the decision in the
current year to enhance the presentation of our financial
performance to initially focus on the statutory income
statement with a reconciliation to adjusted profit before
tax, which is a primary measure to assess our financial
performance. All periods presented have been retrospectively
re-presented. This change does not constitute a change in
accounting policy and there is no impact on recognition,
measurement or profit and loss in any period presented in the
financial statements.
In line with these changes, the Group has rationalised its use
of APMs, which are summarised on pages 189 to 191 including
an explanation of their relevance as well as their definition.
“Afteradisappointingfirsthalf
of 2023, the Group’s full-year
financialperformancewasin
line with expectations after
taking swift action in the second
half of 2023 to manage volume
growth, stabilise margin and
reduce costs. Our capital,
liquidity and funding positions
remain strong, as we look to
grow our business in 2024.”
Dave Watts
Chief Financial Officer
Vanquis Banking Group plc Annual Report and Accounts 2023
33
Governance Financial statementsStrategic Report Shareholder information
Profit/(loss) before tax
The Group’s statutory loss before tax, including amortisation
of acquisition intangibles and exceptional items, was £4.4m;
prior year profit before tax was £110.1m, or £99.4m including
the discontinued consumer credit division (CCD).
The Group reported a lower adjusted profit before tax of £24.9m
(2022: £126.6m). Total income of £488.8m (2022: £480.7m) was
£8.1m higher, driven by higher receivables across all product
lines and repricing initiatives in cards, offset by higher
funding costs. Impairments of £166.1m (2022: £66.1m) reflect
higher new originations, comparatively reduced benefits of
enhancements in IFRS 9 models and post-model releases
than in 2022, lower debt sale profits, and lower revaluation of
the post charge-off asset. The back book underlying asset
quality remained broadly stable. Higher costs of £327.1m
(2022: £304.5m) from inflationary headwinds, elevated
customer compensation claims from claims management
companies and higher exceptional costs. Exceptional costs
of £21.4m were recognised in 2023 (2022: £9.0m), including
transformation costs of £17.0m (2022: £5.3m), comprising
redundancy and outsourcing (£9.4m), property exit costs
(£4.1m) and strategic consultancy (£3.5m).
Income
Net interest income increased by 2% to £442.6m (2022: £432.7m)
with interest income rising 13% driven by receivables growth
in the first three quarters of 2023. The Group’s funding cost
increased from £58.8m in 2022 to £113.4m in 2023, as market
savings rates on retail deposits increased from their historically
low levels as the UK bank base rate has moved upwards.
The Group’s NIM, net interest income as a percentage of average
gross receivables, decreased by 2.2% from 21.2% in 2022 to 19.0%
in 2023, reflecting the higher funding costs and lower asset
yields in both vehicle finance and personal loans. Management
actions, including repricing, taken during the second half of 2023
increased 4Q23 NIM by 0.2% relative to 3Q23.
Fee and commission income reduced 4% to £42.5m (2022:
£44.2m). The Repayment Option Plan (ROP) has been
discontinued; excluding ROP, underlying fee and commission
income increased £2.8m year-on-year.
Impairment/cost of risk
Impairments have benefited from a release of provisions no
longer required in credit cards and vehicle finance, arising
from ongoing IFRS 9 model refinements (£57.7m in 2023), and
the full release of the cost of living post-model adjustment
(£10.8m). The level of releases in 2023 (£74.5m) were lower than
releases in 2022 (£94.1m), contributing to a higher impairment
charge this year.
The macroeconomic environment, the minimal impact of
the cost of living crisis, and refreshed model parameters
reflecting the refocus onto lower-risk market segments, are
the predominant reasons for release of provision. Underlying
asset quality remained high and delinquency trends
remained stable.
The Group’s cost of risk, defined as impairment charges as a
percentage of average gross receivables, has increased from
3.2% in 2022 to 7.1% in 2023.
Risk-adjusted net interest margin, defined as risk-adjusted net
interest income as a percentage of average gross receivables,
has decreased from 20.3% in 2022 to 13.9% in 2023 as a result of
higher impairment charges and higher funding costs.
The Group’s coverage ratio has reduced from 24% at
December 2022 to 21% at December 2023, reflecting the
current nature of the macroeconomic environment,
the release of impairment provision no longer required
predominantly due to IFRS 9 model refinement, and the
stable underlying credit quality of our portfolios.
Costs (adjusted)
Excluding amortisation of acquisition intangibles and
exceptional items described above, adjusted operating
costs increased 3% to £297.8m (2022: £288.0m). Proactive
management actions taken during the second half of 2023
has in part mitigated cost headwinds. These headwinds
include inflation and heightened (speculative) customer
complaints from claims management companies. The Group
has continued investment in the diversification of customer
propositions and the IT investment in the Gateway platform.
Cost management is being embedded as a core discipline
throughout the Group, and transformation cost savings are on
track to meet £60m savings target as advised at 3Q23 with full
benefit expected in 2024.
Tax
The tax charge of £1.6m (2022: £27.8m) on the loss before
tax (profit in 2022) reflects the mainstream corporation tax
rate of 23.5% (2022: 19.0%) on the Group’s (loss)/profit before
tax, exceptional items and amortisation of acquisition
intangibles, generating a tax charge of £7.7m (2022: £29.4m),
a tax credit of £4.3m (2022: £0.2m), and a tax credit of £1.8m
(2022: £1.4m) respectively.
The tax charge arises principally from adverse impacts of
(a) non-deductible expenses of £0.9m (2022: £0.9m), (b) prior
year adjustments of £1.5m (2022: beneficial impact £3.6m)
as a result of write offs of deferred tax assets which are no
longer supportable and lower than anticipated share prices
on vesting of share awards offset in 2022 by the beneficial
impact of agreeing historic tax liabilities; (c) revaluing
deferred tax balances in credit cards and loans of £1.3m (2022:
£3.2m) to reflect from 1 April 2023 the reduction in the bank
corporation tax surcharge rate from 8% to 3% and the increase
in the threshold below which banking profits are not subject
to surcharge from £25m to £100m; (d) net of the beneficial
impact of £1.4m (2022: £nil) from using brought forward capital
losses to offset capital gains. The tax charge for 2022 also
reflected the adverse impact of the bank corporation tax
surcharge of £8.4m and a net beneficial impact of £2.3m from
transactions with discontinued operations including payment
for losses at a discounted price.
Adjusted return on tangible equity (ROTE)
The Group’s adjusted return on tangible equity (ROTE) has
decreased from 21.8% in 2022 to 3.2% in 2023, reflecting the
lower adjusted PBT in 2023.
Earnings per share (EPS)
With the £83.4m decrease in the Group’s profit after tax, the
basic earnings per share has decreased from 32.8p in 2022
to 2.4p loss per share in 2023. The adjusted basic earnings
per share has decreased from 38.7p per share in 2022 to
6.8p in 2023.
Dividend policy
The Board proposes a final dividend of 1.0p per share for 2023,
subject to final regulatory approvals. The Group also signals
its intention to pay a dividend of up to 1.0p per share for 2024,
subject to Board and regulatory approvals, with measured
progression in 2025. From 2026, following full implementation
of the new strategy, the Board will revisit the capital allocation
policy and reset the level of dividend from which to maintain a
progressive policy thereafter.
Vanquis Banking Group plc Annual Report and Accounts 2023
34
Strategic Report
Financial review continued
Summarised balance sheet
2023
£m
2022
£m
Assets
Cash and balances at central banks 743.3 464.9
Amounts receivable from customers
1
2,171.9 1,905.4
Pension asset 38.2 30.7
Goodwill and other intangibles 146.8 134.5
Other assets 108.5 127.8
Discontinued operations — —
3,208.7 2,663.3
Liabilities
Retail deposits 1,950.5 1,100.6
Bank and other borrowings
2
582.5 815.4
Trade and other payables 44.1 62.6
Other liabilities 48.5 69.8
Discontinued operations — 0.2
2,625.6 2,048.6
1 Amounts receivable from customers in 2023 are presented net of £3.2m
(2022: £7.9m) fair value adjustment for portfolio hedged risk. Underlying
receivables from customers are £2,175.1m (2022: £1,913.3m).
2 Bank and other borrowings in 2023 are presented net of £1.0m (2022:
£4.6m) fair value adjustment for hedged risk. Underlying bank and other
borrowings are £583.5m (2022: £820.0m).
Assets have increased by 21% to £3,209m driven by growth
in receivables, and higher balances placed with the Bank of
England, driven by the surplus deposits raised from customers.
Receivables from customers increased by £266.5m (14.0%)
in the year from £1,905.4m in 2022 to £2,171.9m in 2023.
Strong growth in the first half of 2023 was partially offset
by management action to moderate growth in the second
half of the year to enhance the capital position.
Liabilities have increased by 28% to £2,626m as retail deposits
increased by 77% following management actions to promote
retail savings products offered by the Group.
Liquidity and funding
The Group’s liquidity is almost entirely held in the Bank of
England reserve account (2023: £703.3m, 2022: £478.2m).
This represents a significant level of excess liquidity and
a liquidity coverage ratio of 1,263% (2022: 1,139%).
At 31 December 2023, the bank had retail deposit funding
of £1,950.5m (2022: £1,100.6m), and was able to deliver the
required funding base at an attractive cost compared to
wholesale alternatives, and the Group is now significantly
funded by retail deposits (84% of total funding). All outstanding
senior unsecured wholesale funding has now been extinguished
for cost efficiency, although the Group maintains its access
to the wholesale markets via its £2bn Euro Medium-Term Note
programme updated in 2023. Ongoing funding diversification
is provided by modest levels of private securitisation and
Bank of England funding collateralised by both vehicle finance
and credit card assets, together with further retail funding
capabilities developed through 2023 to include notice
accounts and, imminently, easy access and ISAs. The Group’s
cost of funds rose from 2.8% to 4.4% but remains below market
benchmark interest rates, reflecting changes to the Group’s
funding mix post-waiver, and the stable contractual term
duration of the Group’s funding.
Capital
The Group maintains a robust capital position with CET1
ratio of 20.5% (2022: 26.4%) and a total capital ratio of 30.6%
(2022: 37.5%). This is within the Group’s updated CET1 target of
19.5% to 20.5% and represents a surplus of £142.5m (Tier 1) and
£283.4m (total capital) above the Group’s total capital
requirement and regulatory combined buffers. As permitted,
the Group elected to phase in the impact of adopting IFRS 9 over
a five-year period, and has now fully unwound the transition
adjustment as the transition period ended on 1 January 2023.
The overall reduction in the capital ratio in 2023 reflects mainly
the scheduled unwind of the final IFRS 9 adjustment on 1
January 2023, together with additional capital required to be
held for higher lending in the year.
Further information on the impact of the IFRS 9
transitional arrangements is provided in the Group’s
Pillar 3 disclosures available on the Group’s website,
www.vanquisbankinggroup.com.
The risk weighted exposures (RWE) have increased by £180m
year-on-year, primarily because of receivables growth
(£167m of RWE) in 2023.
At 31 December 2023, the Group’s leverage ratio of 16.4% (2023:
21.0%) remains comfortably above the minimum requirement.
Pillar 3 disclosures
Pillar 3 disclosure requirements are set out within the
Disclosure (CRR) part of the PRA rulebook. The consolidated
disclosures of the Group, for the 2023 financial year, will
be issued concurrently with the Annual Report and
Accounts and can be found on the Group’s website,
www.vanquisbankinggroup.com.
Summary balance sheet and financial metrics
2023
£m
2022
£m
Receivables
Gross receivables 2,351.1 2,176.6
Net receivables 2,175.1 1,913.3
Per share metrics
Adjusted EPS (p) 6.8 38.7
Dividend (p) 6.0 15.3
Selected key ratios
Adjusted ROTE 3.2% 21.8%
Asset yield 22.6% 23.7%
Cost of funds 4.4% 2.8%
Net interest margin (NIM) 19.0% 21.2%
Cost of risk 7.1% 3.2%
Risk-adjusted margin (RAM) 13.9% 20.3%
Adjusted cost: income ratio 60.9% 59.9%
Total capital ratio 30.6% 37.5%
CET1 capital ratio 20.5% 26.4%
Liquid assets (HQLA) (£m) 682.0 421.0
Excess HQLA over LCR (£m) 627.0 384.0
Dave Watts
Chief Financial Officer
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
35
Governance Financial statementsStrategic Report Shareholder information
Operating review
Product trading performance
Detailed analysis of the product contribution to the trading results of the Group can be found on page 36 for credit cards,
page 37 for vehicle finance, page 38 for personal loans, and page 39 for Snoop.
Corporate centre
The corporate centre includes operations, technology & change, and support functions which collectively serve the needs of
the wider Group. Costs excluding exceptional items were £60.9m (2022: £64.4m), £3.5m lower than prior year. Excluding inflation
headwinds, costs were £7m lower than prior year, primarily due to management action taken in the second half of 2023 to
realise savings through new transformation initiatives, optimisation of resources, and process efficiency drives, as part of the
commitment to reduce Group costs by £60m.
Funding costs of £28.9m (2022: £13.1m) were higher year-on-year due to the higher interest rate environment. Interest income of
£8.4m (2022: £3.3m) was higher due to higher interest rates on higher cash reserves in the BOE reserve account.
Segment analysis – Adjusted product contribution
Cards
FY23
£m
Vehicle
finance
FY23
£m
Loans
FY23
£m
Other
FY23
£m
Corporate
centre
FY23
£m
Total
FY23
£m
Interest income 371.0 150.3 25.9 0.4 8.4 556.0
Interest expense (51.6) (28.7) (4.0) (0.2) (28.9) (113.4)
Net interest income 319.4 121.6 21.9 0.2 (20.5) 442.6
Fee and commission income 44.2 — — — — 44.2
Fee and commission expense (1.7) — — — — (1.7)
Net fee and commission income 42.5 — — — — 42.5
Other income 1.3 2.0 — 0.4 — 3.7
Total income 363.2 123.6 21.9 0.6 (20.5) 488.8
Impairment charges (130.0) (15.2) (20.9) — — (166.1)
Risk-adjusted income 233.2 108.4 1.0 0.6 (20.5) 322.7
Adjusted operating costs
1
(167.8) (49.5) (16.0) (3.6) (60.9) (297.8)
Adjusted PBT/(LBT) contribution 65.4 58.9 (15.0) (3.0) (81.4) 24.9
Cards
FY22
£m
Vehicle
finance
FY22
£m
Loans
FY22
£m
Other
FY22
£m
Corporate
centre
FY22
£m
Total
FY22
£m
Interest income 337.4 137.7 13.1 — 3.3 491.5
Interest expense (22.4) (22.1) (1.2) — (13.1) (58.8)
Net interest income 315.0 115.6 11.9 — (9.8) 432.7
Fee and commission income 47.0 — — — — 47.0
Fee and commission expense (2.8) — — — — (2.8)
Net fee and commission income 44.2 — — — — 44.2
Other income 0.9 2.9 — — — 3.8
Total income 360.1 118.5 11.9 — (9.8) 480.7
Impairment charges (16.8) (40.8) (8.5) — — (66.1)
Risk-adjusted income 343.3 77.7 3.4 — (9.8) 414.6
Adjusted operating costs
1
(164.8) (39.7) (19.1) — (64.4) (288.0)
Adjusted PBT/(LBT) contribution 178.5 38.0 (15.7) — (74.2) 126.6
1 Adjusted operating costs are stated before exceptional items.
Vanquis Banking Group plc Annual Report and Accounts 2023
36
Strategic Report
2023
£m
2022
£m Change
Total customer numbers ('000) 1,375.5 1,540.8 (10.7%)
New customer bookings ('000) 267.3 224.6 19.0%
Period-end receivables 1,277.7 1,181.6 8.1%
Average gross receivables
1
1,416.9 1,331.9 6.4%
Interest income 371.0 337.4 10.0%
Interest expense (51.6) (22.4) 130.4%
Net interest income 319.4 315.0 1.4%
Net fee and commission
income 42.5 44.2 (3.8%)
Other income 1.3 0.9 44.4%
Total income 363.2 360.1 0.9%
Impairment charges (130.0) (16.8) 673.8%
Risk adjusted income 233.2 343.3 (32.1%)
Adjusted operating costs
2
(167.8) (164.8) 1.8%
Adjusted PBT contribution
3
65.4 178.5 (63.4%)
Asset yield
4
24.7% 25.0% (0.3%)
Cost of risk
5
(9.2%) (1.3%) (7.9%)
Risk adjusted margin
6
16.5% 25.8% (9.3%)
1 Average of gross customer interest earning balances for the 13 months
ended 31 December.
2 Adjusted operating costs are stated before exceptional items.
3 Adjusted PBT contribution is stated as profit before tax before exceptional
costs.
4 Interest income from customer receivables for the 12 months ended 31
December as a percentage of average gross receivables.
5 Impairment charges for the 12 months ended 31 December as a
percentage of average gross receivables.
6 Total income, excluding exceptional items less impairment charge for
the 12 months ended 31 December as a percentage of average gross
receivables.
The Group’s credit card business is a leading player in
the non-prime Credit Card market. In 2023, we received
Moneyfacts Consumer Awards winner – Credit Card App of
the Year and Credit Builder Card Provider of the Year, together
with two Card and Payments Awards for ‘Best Customer
Service’ and for the ‘Best Benefits/Loyalty Scheme’.
We offer our card products to a broad spectrum of customers
but are focused particularly on providing access to a credit
card to customers who may struggle to obtain one from
a mainstream provider. We support our customers through
great service whether it be our award-winning app or the
people in our customer service teams.
In 2023, we extended our digital service to customers
by offering Apple Pay, as well as new features within the
Vanquis App including enabling customers to view their card
information and PIN, and a new way for customers to register
for Google Wallet from within the Vanquis App. Take-up of all
these new features has been strong, with over 450k of our
customers already signing up to Apple Pay.
We are committed to continuously improving our services
and support for customers, and in 2023 we sought to
embed new ways of working based on an ‘empathic design’
approach and conducted a significant piece of qualitative
research to deeply understand our customers, putting our
customers at the very heart of how we design and improve
our customer journeys.
From a service rating perspective, Vanquis credit card’s latest
2023 Institute of Customer Service (ICS) Satisfaction Index
score is 86.8 vs an all-sector average of 77.7. We aim to make
our customer experience effortless, and these results directly
demonstrate the progress we have made.
Total customer numbers decreased by 10.7% to 1,375.5k, as
of December 2023 (2022: 1,540.8k), which in part was driven
by a campaign to close dormant accounts at the end of
the year for customers who no longer needed/wanted their
Vanquis card.
New customer bookings for the year were 267.3k, up
from 224.6k in 2022, as a result of expanding the range of
promotional offers to new customers and working with
affiliates and our partner for our co-branded card (thimbl).
Financial performance
For FY23, the business reported adjusted PBT contribution of
£65.4m (2022: £178.5m) and period-end net receivables of
£1,277.7m (2022: £1,181.6m).
Throughout 2023, the management team has focused on
increasing customer engagement and new customer growth,
delivering 6.4% growth in average receivables to £1,416.9m
(2022 £1,331.9m), partly due to the uptake of digital wallet
usage amongst customers.
During the second half of the year, deliberate action was taken
to moderate growth to improve profitability by reducing the
day one impact of IFRS 9 driven expected credit losses from
new business.
Total income was up 0.9% to £363.2m (2022: £360.1m), due to net
interest income increasing by 1.4% to £319.4m (2022: £315.0m),
net fee and commission income declining by 3.8% to £42.5m
(2022: £44.2m), and other income increasing by 44.4% to £1.3m
(2022: £0.9m). Asset yield reduced from 25.0% to 24.7%.
Interest expense rose from £22.4m to £51.6m as market savings
rates and UK bank base rate moved upwards, impacting the
Group’s funding cost.
Risk adjusted income fell £110.1m to £233.2m (2022: £343.3m), as a
result of impairment charges rising to £130.0m (2022: £16.8m).
Impairments benefited from a release of provisions no longer
required arising from ongoing IFRS 9 model refinements
(£17.0m) and the full release of the cost of living post model
adjustment (£10.0m), but the level of releases in 2023 were
lower than releases in 2022. Impairment provision releases
(£92.5m) last year related to Covid-19 and model recalibration.
Underlying asset quality remained stable year-on-year. The
annualised cost of risk increased from 1.3% to 9.2%, and risk
adjusted margin fell to 16.5% (2022: 25.8%).
Adjusted operating costs increased by 1.8% to £167.8m
(2022: £164.8m), against a backdrop of significant inflation
and growth in customer acquisition.
Operating review continued
Credit cards - Continues to attract new customer bookings
Vanquis Banking Group plc Annual Report and Accounts 2023
37
Governance Financial statementsStrategic Report Shareholder information
2023
£m
2022
£m Change
Total customer numbers ('000) 111.7 100.0 11.7%
New customer bookings ('000) 50.8 42.1 20.7%
Period-end receivables 792.2 655.4 20.9%
Average gross receivables
1
784.7 656.6 19.5%
Interest income 150.3 137.7 9.2%
Interest expense (28.7) (22.1) 29.9%
Net interest income 121.6 115.6 5.2%
Other income 2.0 2.9 (31.0%)
Total income 123.6 118.5 4.3%
Impairment charges (15.2) (40.8) (62.7%)
Risk-adjusted income 108.4 77.7 39.5%
Adjusted operating costs
2
(49.5) (39.7) 24.7%
Adjusted PBT contribution
3
58.9 38.0 55.0%
Asset yield
4
19.2% 21.0% (1.8%)
Cost of risk
5
(1.9%) (6.2%) 4.3%
Risk adjusted margin
6
13.8% 11.8% 2.0%
1 Average of gross customer interest earning balances for the 13 months
ended 31 December.
2 Adjusted operating costs are stated before exceptional items.
3 Adjusted PBT contribution is stated as profit before tax before exceptional
costs.
4 Interest income from customer receivables for the 12 months ended 31
December as a percentage of average gross receivables.
5 Impairment charges for the 12 months ended 31 December as a
percentage of average gross receivables.
6 Total income, excluding exceptional items less impairment charge for
the 12 months ended 31 December as a percentage of average gross
receivables.
The Group’s vehicle finance business is a significant player in
the non-prime UK vehicle finance market, as recognised by
the numerous awards won in 2023, reflecting our hard work,
passion, and dedication.
We are experts in helping customers to access finance when
they might have struggled to get approval from mainstream
lenders. Our customers represent one in five of UK adults who
have a poor credit history but need a reliable car, motorbike,
or van to suit their lifestyle and financial situation. Our core
product is a Conditional Sale Agreement, which is a type of
vehicle finance that helps spread the cost of a used vehicle
over time, instead of paying for it all upfront. This is different
to the other types of vehicle finance, like Hire Purchase (HP)
or Personal Contract Purchase (PCP), as a Conditional Sale
Agreement has no additional fee to own the vehicle; once
the customer has made the final repayment, they legally own
the vehicle. A Conditional Sale Agreement uses a fixed APR,
so monthly payments are predictable and remain the same
for the duration of the agreement, which is typically between
36-60 months.
Good customer outcomes are important to us, and once a
customer is with us, we’re focused on helping them to achieve
the best outcomes possible, whether that’s simply paying
their finance each month until they own their used vehicle,
or for example by supporting them if they’re able to settle
their agreement early. We also understand that customers
may experience difficulties during their agreement, and
we’re focused on supporting them should that happen.
We have a range of options that allow us to help customers
get back on track, or to otherwise exit the agreement in the
‘best way possible’.
Total customer numbers grew 11.7% to 111.7k, as of December
2023 (2022: 100.0k). This has been achieved through several
initiatives that have included technology investment in
Moneybarn Direct, targeted retention of customers, and
entry into the Personal Contract Hire market.
New customer bookings for the year were 50.8k, up 20.7%
from 42.1k in 2022, as a result of strengthened distribution and
competitive pricing. The improved price competitiveness
was due to our funding costs from retail deposits being
comparatively lower than the wholesale funding relied
upon by most of our competitors.Notably, Moneybarn Direct,
our direct to customer channel, had a strong year with
approvals up 82%.
Financial performance
For FY23, vehicle finance reported an adjusted PBT contribution
of £58.9m (2022: £38.0m) and receivables at the end of the
period up 20.9% to £792.2m (2022: £655.4m).
Throughout 2023, management focused on sustainable
growth, delivering 19.5% growth in average gross receivables
to £784.7m (2022: £656.6m), with deliberate action taken to
moderate growth in the second half of the year to improve
profitability by reducing the day one impact of IFRS 9 driven
expected credit losses from new business.
Interest income rose by 9.2% to £150.3m (2022: £137.7m),
delivering 19.2% annualised asset yield (2022: 21.0%).
Net interest income rose by 5.2% to £121.6m (2022: £115.6m),
as a result of the increase in receivables being offset by
rising interest expense due to market savings rates and UK
bank base rate moving upwards, impacting the Group’s
funding cost.
Other income fell to £2.0m (2022: £2.9m), with total income
amounting to £123.6m (2022: £118.5m).
Risk adjusted income increased by £30.7m to £108.4m
(2022: £77.7m), benefiting from impairments reducing £25.6m
to £15.2m (2022: £40.8m). The impairment reduction reflects
IFRS 9 model refinements and recalibration leading to an
impairment provision release of £47.0m in 2023 (2022: £0.5m),
as Vehicle Finance has purposefully transitioned towards the
lower credit risk near prime market. This one-off impairment
provision release masks higher expected losses from receivables
growth (£18.1m) particularly evident during the first half of 2023.
As a result, cost of risk dropped from 6.2% to 1.9%.
The risk adjusted margin improved to 13.8% (2022: 11.8%).
Adjusted operating costs rose by £9.8m (24.7%) to £49.5m
(2022: £39.7m) with efficiency gains offset by increased
complaints costs driven primarily by spurious claims from
claims management companies, and higher volume.
Vehicle finance has never entered into discretionary broker
commission arrangements.
Vehicle finance - continued robust performance
Vanquis Banking Group plc Annual Report and Accounts 2023
38
Strategic Report
Operating review continued
Personal loans - A stable year-on-year performance
2023
£m
2022
£m Change
Total customer numbers ('000) 43.7 34.4 27.0%
New customer bookings ('000) 29.6 27.0 9.6%
Period-end receivables 102.4 76.3 34.2%
Average gross receivables
1
123.1 50.9 141.8%
Interest income 25.9 13.1 97.7%
Interest expense (4.0) (1.2) 233.3%
Net interest income 21.9 11.9 84.0%
Total income 21.9 11.9 84.0%
Impairment charges (20.9) (8.5) 145.9%
Risk-adjusted income 1.0 3.4 (70.6%)
Operating costs (16.0) (19.1) (16.2%)
LBT contribution (15.0) (15.7) (4.5%)
Asset yield
2
21.0% 25.7% (4.7%)
Cost of risk
3
(17.0%) (16.7%) (0.3%)
Risk adjusted margin
4
0.8% 6.7% (5.9%)
1 Average of gross customer interest earning balances for the 13 months
ended 31 December.
2 Interest income from customer receivables for the 12 months ended 31
December as a percentage of average gross receivables.
3 Impairment charges for the 12 months ended 31 December as a
percentage of average gross receivables.
4 Total income, excluding exceptional items less impairment charge for
the 12 months ended 31 December as a percentage of average gross
receivables.
The Group’s unsecured personal loan business was
established to provide our customers with a broader range of
borrowing options, with a product tailored to the non-prime
market. Most customers are taking out a personal loan to
either consolidate other debts or to enable them to make
home improvements, although the full range of reasons for
borrowing includes a wide range of purposes.
When selecting their loan, customers are looking for a loan
that provides them with the amount of money they need, with
repayments over a period that makes their monthly payment
affordable, at the lowest possible price (APR). From extensive
market research, we have identified that our customers
value repayment certainty and flexibility if circumstances
change, so we offer fixed APRs for the period of the loan,
no penalty fees for additional interest charged for missed
or late payments and there is no retention of interest when
customers pay off the loan early.
Total customer numbers grew 27.0% to 43.7k, as of December 2023
(2022: 34.4k).
New customer bookings for the year were 29.6k, up 9.6% from
27.0k in 2022, driven by the expansion of the product range
offered to both existing and new to Vanquis customers, with
Vanquis branded loans launched on the new technology
platform.
Loans customers are highly satisfied by their Vanquis loan and
the service they receive. This is evidenced by loans customers
giving their loan a Net Promoter Score of 51, a customer
satisfaction score of 89% and by 89% of customers also saying
that they would use a Vanquis loan again. The Vanquis loan
product was also the winner of ‘Best Loan Provider’ in the 2023
Consumer Credit Awards.
Financial performance
For FY23, the business reported a LBT contribution of £(15.0)m
loss (2022: £(15.7)m) and receivables at the end of the period
up 34.2% to £102.4m (2022: £76.3m).
Personal loans average gross receivables increased 141.8%
to £123.1m (2022: £50.9m). Deliberate action was taken to
moderate growth in the second half of the year to improve
profitability by reducing the day one impact of IFRS 9 driven
expected credit losses from new business. This included a
temporary pause in active marketing of personal loans as we
undertook the Group wide strategic refresh.
Interest income rose by 97.7% to £25.9m (2022: £13.1m),
delivering 21.0% asset yield (2022: 25.7%), as a result of the
year-on-year receivables growth and introduction of lower
APR loans as part of the product range expansion.
Interest expense rose by 233.3% to £4.0m, reflecting
receivables growth and rising interest expense due to market
savings rates and the UK bank base rate moving upwards,
impacting the Group’s funding cost.
Net interest income was up 84.0% to £21.9m (2022: £11.9m).
Risk adjusted income decreased by £2.4m to £1.0m (2022:
£3.4m), as a result of an increase in impairment from £8.5m to
£20.9m. The increase in impairment reflects a recalibration of
expected losses as we refine our underwriting parameters on
this relatively immature portfolio, resulting in the cost of risk
increasing to 17.0% from 16.7%.
The risk adjusted margin declined to 0.8% (2022: 6.7%).
Operating costs were ongoing, albeit lower by £3.1m to £16.0m
(2022: £19.1m), largely due to reduced technology investment.
Vanquis Banking Group plc Annual Report and Accounts 2023
39
Governance Financial statementsStrategic Report Shareholder information
Snoop customer
Age: 29
Lives with: Partner, Danielle in a semi-detached house
in Burton on Trent.
Job Role: Radiographer at Queens Hospital.
Likes: Cinema, video games and going to the gym.
“My partner and I live in Burton on Trent in a two
bedroom semi with a nice garden. It’s close to work as
we’re both radiographers at Queens Hospital in Burton,
working a range of shifts, so it’s ideal.
I’ve been using Snoop for around two years now
after hearing about the app through a money saving
website. The main attraction was being able to track
my spending and see where I could save myself some
money. I downloaded the app and started using it right
away. It’s very user friendly with a good tips section and
I like that it alerts you to upcoming deals.
Being able to see my outgoings by category has really
helped and seeing how the price of things fluctuates
has helped me refine some of my spending habits and
really think about what I’m buying now.
For example, I didn’t realise how much money I was
spending each month on takeaways – it was a lot and
was quite a shock to me at the time. Now I’m aware
of it, I maybe have one a week now, but I don’t buy
without consideration.
I’ll think about what I’m ordering, only order what I really
need and as a result I’m saving a lot more money each
month – and I’m eating more healthy foods!
I’m getting so many insights into my financial habits.
The tips section has been great; Snoop shared an offer
with me to switch bank accounts to get £175 cash back
from the bank. That was useful and bumped up our
savings that month.
The Snoop brand is cool too, breaking things down and
explaining everything really clearly. The emojis make all
the messages feel more personal, like we’re connected,
and I like the cute little symbol too.”
Meet
Hugo
Snoop is an award-winning fintech that uses open banking
to help users save money and manage their finances more
effectively. The app helps its customers build their financial
capability, and targets annual savings of up to £1,500. Snoop
demonstrably improves financial wellbeing with over 15,000
four and five-star reviews, and from a survey of 500 users,
a 95% customer recommendation rate, and 80% of users
reporting increased financial confidence. As such, it is an
important addition to the Group’s customer proposition.
Leveraging Snoop’s innovative technology and data capabilities
will also unlock valuable opportunities for the Group. Test
marketing of Snoop to Vanquis customers progressed ahead
of expectations in 4Q23 and we will continue to actively
promote Snoop to our 1.5 million strong customer base in 2024.
This will position the Group as a relevant presence in their daily
lives, drive improved creditworthiness and support improved
borrowing and debt management.
Snoop’s impact extends beyond individual users, offering
businesses valuable insights into evolving consumer spending
behaviours. In 4Q23, Snoop launched SpendMapper, a self-
service business intelligence dashboard. SpendMapper
leverages over £100bn of real-time spending data to help
businesses understand how and where consumers spend,
and how this is changing. Further scaling the business in 2024
will enrich Snoop’s data insight proposition and enhance the
Group’s overall data capabilities.
Snoop was incorporated into the Group on 7 August 2023, and
the business reported an adjusted loss before tax of £(2.5)m
from the date of incorporation to 31 December 2023.
Snoop - Helps our customers save money
“ I downloaded the app and
started using it right away.
It’s very user friendly.”
Vanquis Banking Group plc Annual Report and Accounts 2023
40
Strategic Report
Section 172(1) statement
The directors have acted in a way that they
considered, in good faith, would be most likely
to promote the success of the Company for
the benefit of its members as a whole, having
regard to the matters set out in section
172(a)–(f) of the Companies Act 2006 (s.172).
Stakeholder engagement
The Group has a well-established stakeholder
engagement strategy which defines our
priorities, opportunities and responsibilities
for engagement with our stakeholders and
recognises differing stakeholder interests and
preferred methods of engagement.
Our stakeholders, how we’ve engaged with
them during 2023 and the outcomes of this
engagement can be found on pages 63 to 67.
Principal decisions
S.172 of the Companies Act 2006 necessitates
effective decision making by the Board.
The decisions of the Board are led by the
Group’s Purpose, culture and strategy with the
objective being to deliver long-term value for
its stakeholders. Board activities during the
year are detailed on pages 59 and 60 and the
principal decisions made by the Board can
be found on pages 41, 58, 60, 65 and 74.
Disclosures relating to how the directors
have discharged their responsibilities under
s.172 are integrated throughout the Strategic
Report and Governance Report; please
see the table opposite for references. More
information on our Board’s setting of the
Group’s strategy can be found on page
57 and 58.
Section 172 provision Relevant disclosure Pages
The likely
consequences
of any decision
in the long term
Chairman’s Statement
Business model
Strategy
Sustainability
Non-financial and sustainability
information statement
Risk management and principal risks
Viability statement
Board focus areas during 2023
Stakeholder engagement and
decision making
Governance Report
Nomination Committee Report
Directors’ Remuneration Report
4
10
9
14
42
44
51
59
63
52
73
93
The interests of
the Company’s
employees
Chairman’s Statement
CEO’s Review
Sustainability – our colleagues
Risk management and principal risks
Chairman’s introduction to governance
Board focus areas during 2023
The Board: our culture
Stakeholder engagement and
decision making
Our Designated Non-Executive
Colleague Champion
4
6
16
44
52
59
61
63
67
The need to foster the
Company’s business
relationships with
suppliers, customers
and others
Chairman’s Statement
CEO’s Review
Business model
Strategy
Sustainability
Key performance indicators
Non-financial and sustainability
information statement
Risk management and principal risks
Stakeholder engagement and
decision making
Engagement with shareholders
4
6
10
9
14
12
42
44
63
67
The impact of the
Company’s operations
on the community and
the environment
Chairman’s Statement
CEO’s Review
Sustainability – Community
Foundation overview
Sustainability – TCFD disclosure
Non-financial and sustainability
information statement
Sustainability - Our ESG Strategy
Stakeholder engagement and
decision making
Customer, Culture and Ethics
Committee report
4
6
17
19
42
15
63
78
The desirability
of the Company
maintaining a
reputation for
high standards of
business conduct
Chairman’s Statement
CEO’s Review
Strategy
Sustainability
Sustainability – TCFD disclosure
Non-financial and sustainability
information statement
Stakeholder engagement and
decision making
Board focus areas during 2023
The Board: our culture
Assessing Board performance
Audit and Risk Committees
4
6
9
14
19
42
63
59
61
71
80 to 86
The need to act fairly
as between members
of the Company
Stakeholder engagement and
decision making
Investor relations
Board activities
Directors’ Remuneration Report
Business model
63
67
59
93
10
Vanquis Banking Group plc Annual Report and Accounts 2023
41
Governance Financial statementsStrategic Report Shareholder information
Decision making for long-term success
We believe that considering the broad range of our
stakeholders’ perspectives in our Board discussion and
decision making is central to us making balanced and
well-informed decisions. For the last three years we
have integrated an s.172 impact analysis into our Board
reporting and this helps draw out stakeholder perspectives.
Stakeholders have different interests and priorities and the
Board sees its role to make decisions that balance stakeholder
interests, recognising that decisions will not always result in
a positive outcome for all stakeholders. Ultimately, the Board
aims to make decisions that drive the Company’s long-term
success and align to the Group’s Purpose, culture and strategy
and deliver sustainable value to our stakeholders as a whole.
During 2023, the Board made several principal decisions that
demonstrate this commitment. You can read about these
principal decisions, including the Board’s decision making
process and considerations in reaching their decision, below
and on pages 41, 58, 60, 65 and 74.
Principal decision: the acquisition of money-saving fintech Usnoop Limited (Snoop).
The Board approved the acquisition of fintech business Snoop which had developed an award-winning personal financial management
app. The Snoop app was considered by the Board as being of benefit to the Group’s customers and aligned with the Group’s Purpose to
assist its customers with their financial planning and education. To read more about Snoop please see page 39.
Decision making process
The Board was made aware of the potential acquisition of Snoop in
Q2 2023, and supported management to proceed with undertaking
due diligence with the support of third-party advisors. At the Group
Strategy Conference held in June 2023, the Board was introduced to
Snoop’s management and proposition in person. A further request
for approval to proceed in principle with the proposed acquisition of
Snoop was received by the Board in July 2023 which was supportive
and delegated authority to a sub-committee to oversee and finalise
the transaction. At each stage, the Board, and later the dedicated
sub-committee, considered what value and benefits the Group and
its customers would receive from the purchase, the rationale for the
purchase, what other options might be available to the Group, and
that the transaction had been structured appropriately.
Strategy and Purpose
The Group’s Purpose is to deliver caring banking so our customers
can make the most of life’s experiences, and Snoop’s Purpose, to
make everyone better off, aligned well. The Snoop app is a personal
financial management tool that offers money management, bill
management, bill switching and personalised financial insights to
its customers. The Board recognised the Snoop app as having the
potential to support the Group’s current customers and potential
customers to better control their finances and reduce their cost-of-
living proactively and sustainably. The Snoop app was recognised as
best in class and provided a straightforward and high-quality user
experience. Becoming part of the Group provided Snoop with the
potential opportunity to access a large number of customers that
might benefit from their app.
The Board further recognised the Group’s strategy to modernise
and benefit from mature, open-banking-driven technology that
could provide insights into the financial wellbeing of its customers.
Furthermore, the Snoop management team alongside the Snoop
technology would bring additional and valuable expertise into
the Group.
Challenges
The Board sought and received independent legal, commercial
and financial advice regarding the transaction and ensured that
a comprehensive due diligence process had been completed to a
high standard.
The Board noted the financial projection risks that accompanied a
fast-growing start-up, and noted that management had addressed
these potential risks (including the risk of revenue and customer
growth failing to meet projections) in the transaction structure.
Snoop was considered a relatively low business risk from a conduct
risk perspective as it did not provide lending, had not taken any
customer deposits and did not provide financial advice.
Balancing stakeholder interests
The Board carefully considered the risks and benefits of the
transaction as they pertained to its stakeholders. The Board expected
the acquisition of Snoop to deliver benefits to the Group’s stakeholders
as a whole and in particular to its customers. Analysis had identified
that those Group customers who already had the Snoop app had
demonstrated active use compared to other cohorts of users. The
Board recognised the potential to provide the Group’s customers with
value-added services commensurate with the Group’s community
purpose to improve financial education and aid social mobility which
was also a keen interest of the Group’s regulators, the PRA and FCA.
In making this decision, the Board expected Snoop to contribute
to the long-term success of the Group to the benefit to its investors
and shareholders.
Links to stakeholders
Links to risks
P10
P11
Links to strategic themes
1
4
Links to s.172
Strategic themes
Find our key risks on
pages 46 to 50
P
Links to risks
1
Customer centricity
2
Insightful risk management
3
4
5
Efficient organisation
Digital, tech, data
and analytics
A great people proposition
Links to s.172Links to stakeholders
Customers
Colleagues
Regulators and
government
Shareholders
Communities
Suppliers
The need to act fairly as between
members of the Company
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
Vanquis Banking Group plc Annual Report and Accounts 2023
42
Strategic Report
Non-financial and sustainability information statement
Information on the Group’s non-financial impact can be found throughout the report.
The table below explains how the Group meets the non-financial and sustainability information
reporting requirements of section 414CB of the Companies Act 2006. The requirements are
addressed in this section by means of cross referencing to indicate which sections of the
narrative they are embedded.
Pages
Business model
The Group has re-articulated its Purpose: to deliver caring banking so our customers can
make the most of life’s opportunities. The Group is committed to delivering differentiated
solutions to meet customer needs. You can read about the Group’s strategy and
business model on pages 9 to 11.
Pages 2-3
Pages 9-11
Colleagues and their
contribution
Our colleagues are central to the Group’s long-term success and the achievement
of its mission. We continue to work to enhance our workplace culture and maximise
colleague engagement.
Supporting policies: Inclusion and Diversity Policy, Family Friendly Policy, Mental Health
& Wellbeing Policy.
Due diligence: All People policies were reviewed during 2022 to ensure a unified
approach under the new shared corporate services model. Diversity metrics are closely
monitored (see Nomination Committee Report from page 73-77). Health and Safety
training is mandatory for all new colleagues and there is regular refresher training
throughout the year.
Our Affinity Groups and peer circles allow us to take a Group-wide approach when
it comes to moving essential conversations forward around inclusion and diversity.
They also provide both a sounding board and spring board for ideas, as well as a
platform for transformative action.
Risks and risk management: People risk (page 50).
Measurement: Colleague engagement is measured through our Group colleague
surveys (page 16).
Pages 14-16
Page 64
Environmental impact
Supporting policies: Environmental Management Policy, Climate Principal Risk Policy
and Procurement Policy.
Due diligence: The Group reports in line with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) which enables us to consider the impact
of climate-relate risks and opportunities on the Group’s financial performance. Also,
the Group’s supplier due diligence processes and procedures involve engaging with
suppliers to understand their exposure to material climate-related risk and carbon
reduction commitments.
Risks and risk management: Strategic performance risk (page 50), customer risk
(page 46) and regulatory risk (page 47).
Measurement: Pursuant to the FCA’s Listing Rule 9.8.6R(8) and the Companies (Directors’
Report) and Limited Liability Partnership (Energy and Carbon Report) Regulations 2018
and the Companies (Strategic Report)(Climate-related Financial Disclosure) Regulations
2022, the Group publishes an annual TCFD report and discloses comprehensive
environmental data in its Annual Report and Accounts. The Group also makes an
annual submission to the CDP. Finally, as a signatory to the UN Global Compact, the
Group is aligned with its environmental principles and reports on its progress annually,
www.vanquisbankinggroup.com/sustainability/responding-climate-change/.
Page 15
Pages 19-28
Page 64
Social and
community impact
The Group’s community investment activities are delivered through the Vanquis Banking
Group Foundation. The mission of this Foundation is to improve the lives of children and
young people by providing educational and social development opportunities which
support financial and social inclusion.
Supporting policies: Community Involvement Policy and Volunteering and Matched-
Funding Policy.
Due diligence: The activities and initiatives that are delivered via the Group’s Foundation
are reviewed and approved by the Group Executive Committee and Group plc Board on
an ongoing basis. This involves ensuring that the Group’s investments have a sustainable
benefit to the communities it serves and the business itself. A dedicated Group team is
responsible for the design, development and delivery of the Group’s Foundation.
Risks and risk management: People risk (page 50) and regulatory risk (page 47).
Measurement: The Group reports on the amount it has invested in its community
investment activities, as well as the social impacts that have been delivered, in its
Annual Report and Accounts. This is done using the B4SI (Business for Social Impact)
Framework so that the Group can understand the differences its contributions make
to business and society. The Group’s colleague surveys are also used to understand
colleagues’ understanding of, and engagement with, the Group’s community investment
programme (page 16).
Pages 14-18
Page 65
Vanquis Banking Group plc Annual Report and Accounts 2023
43
Governance Financial statementsStrategic Report Shareholder information
Pages
Respect for human rights
The Group is committed to supporting and respecting human rights and, as such, is
opposed to slavery and human trafficking in both its direct operations and in the indirect
operations of its supply chains. As such, the Group will not knowingly support or do
business with any organisation involved in slavery or human trafficking.
Supporting policies: Human Rights and Modern Slavery Policy, Procurement Policy,
Diversity Policy and Whistleblowing Policy.
Due diligence: The Group has well-established supplier due diligence processes and
procedures to manage supply chain-based risks and ensure suppliers comply with the
Group’s policy requirements and meet legislative requirements, including those that
relate to the Modern Slavery Act 2015. Across the Group, all new suppliers are assessed
for the types of potential risks they pose and are sent questionnaires covering issues
such as financial stability, data protection, information security, business continuity,
regulatory compliance, and corporate responsibility.
Risks and risk management: Regulatory risk (page 47), people risk (page 50) and
customer risk (page 46).
Measurement: Pursuant to section 54(1) of the UK Modern
Slavery Act 2015, we produce a Modern Slavery Statement, see
www.vanquisbankinggroup.com/modern-slavery-statement/. Also, as a
signatory to the United Nations Global Compact, the Group is aligned with its
human rights and labour standards and reports on its progress annually, see
https://unglobalcompact.org/what-is-gc/participants/148181-Vanquis-Banking-Group.
Pages 14-18
Anti-corruption and
bribery measures
Supporting policies: Anti-Bribery and Corruption Policy, Corporate Hospitality Policy,
Whistleblowing Policy.
Due diligence: The Group has a zero-tolerance approach to bribery and corruption
and all colleagues undertake mandatory training. The Audit Committee oversees
compliance with the Corporate Hospitality Policy and the Board oversees the
Whistleblowing Policy.
Risks and risk management: Customer risk (page 46) and regulatory risk (page 47).
Measurement: Completion of mandatory training is monitored; whistleblowing reports
are overseen by the Board; and any matters relating to corporate hospitality are
monitored by the Audit Committee.
Pages 90-91
Climate-related financial
disclosures
Task Force on Climate-related Financial Disclosures (TCFD).
In line with the FCA’s Listing Rule 9.8.6R(8) and requirements of the Climate-related
Financial Disclosure (CFD) Regulations 2022, we have included a statement in the
strategic review of this report which is consistent with the four recommendations and 11
recommended disclosures of the Task Force on Climate-related Financial Disclosures
(TCFD). Our disclosures are in line with the four core elements (or pillars) of the TCFD
(governance, strategy, risk management, and metrics and targets).
Page 15
Pages 19-28
Vanquis Banking Group plc Annual Report and Accounts 2023
44
Strategic Report
Risk management and principal risks
Embedding an effective Risk Management
Framework and culture
“ In 2023, we focused on embedding the
Group’s risk strategy and Risk Harmonisation
programme. This helped us to successfully
navigatethroughayearofsignificantchange
and stabilise our business as we look to explore
and refresh our strategic opportunities. Our Risk
Management Framework is focused on insight,
support and challenge to ensure the Group
grows in a safe and sustainable manner. We
continue to embed a strong risk awareness
culture and control environment.”
Gareth Cronin
Group Chief Risk Officer
Our Purpose
To deliver caring banking so our customers can make the most of life’s opportunities.
The Risk Management Framework (RMF) creates a clear link between our Purpose and strategic risk objectives:
Our strategy
1. Customer
centricity
2. Insightful risk
management
3. Efficient
organisation
4. Digital, tech, data
and analytics
5. A great people
proposition
Strategic risk objectives
Supporting the realisation of our strategy and ensuring positive outcomes for our customers and key stakeholders.
Maintaining a secure and efficient
capital and funding structure
Delivering sustainable growth and
returns to our shareholders
Optimising our reputation and
becoming the trusted bank for our
target customers
Establishing a strong risk and
customer-centric culture
Maintaining operational resilience
and business capabilities
Managing execution risk associated
with strategic and operational
change activity
Risk pillars
Our four risk pillars underpin the delivery of our strategic risk objectives.
Customer and
conduct
We deliver fair customer
outcomes and meet
the expectations of our
regulators.
Financial
We manage our
credit risk exposures,
supported by financial
strength and liquidity
in normal and stressed
conditions.
Operational
We ensure operational
risk is minimised
through effective
people, processes and
systems aligned to our
strategic goals.
Strategic
We seek new business
opportunities which are
aligned to our customer,
regulatory and
commercial objectives.
Vanquis Banking Group plc Annual Report and Accounts 2023
45
Governance Financial statementsStrategic Report Shareholder information
Three Lines of Defence model
Vanquis Banking Group operates a Three Lines of Defence model to articulate key
accountabilities and responsibilities for managing risk and to support effective embedding of
risk management across the Group.
The First Line of Defence
– line management
Owns the risk and is responsible
for identifying, assessing,
monitoring and reporting risk
within its respective areas,
whilst ensuring that appropriate
internal controls, processes and
systems are in place to deliver
against business strategy and
objectives.
The Second Line of
Defence – Risk function
Establishes the RMF and
policies and supports the First
Line of Defence in developing
minimum control standards and
expectations to manage risk.
Provides independent oversight
of governance, risk management
and controls across the Group
to ensure risks are identified,
measured, managed and
reported appropriately.
The Third Line of Defence
– Internal Audit
Provides independent and
objective assurance on
the design adequacy and
operational effectiveness of
internal controls, and overall
effectiveness of Vanquis Banking
Group’s risk governance and risk
management practices, and
provides assurance on whether
the First and Second Lines of
Defence fulfil their respective
responsibilities.
Overview
During 2023, the Group continued to strengthen its risk
management capabilities through the completion and
embedding of the Risk Harmonisation programme. The
transformation made has been validated through an
independent external quality assessment, which confirmed
significant improvements in the overall risk maturity across
the Group and the business’s approach to managing risks
collaboratively.
The Risk function has been integral to the strategic
opportunities undertaken throughout the year. The function
provided oversight of the governance, risk management and
controls to the plans in place for the offshoring of aspects of
customer services, the reduction in the Group’s total capital
requirement (TCR), transformation programmes across our
product lines and the emerging strategy development. This
has been on the backdrop of significant changes to the
composition of the Board and executive management.
Group approach to risk management
Our RMF provides a comprehensive approach to the
consistent management of risks across the Group. It supports
the aggregated reporting and escalation of material risks to
the Group’s Board and executive management.
Managing risk is an integral part to the management of
the business, its strategy and corporate governance. It is
critical to enable us to optimise our shareholder return whilst
maximising our business opportunities and positive outcomes
for all our key stakeholders, which include shareholders,
customers, colleagues and regulators.
The RMF adopts an enterprise approach, enabling a single
view of all the current and emerging risks and consistent
management of those risks across the Group. Fundamental to
the application of an effective RMF are the following attributes:
– Risk culture: We promote a risk culture that supports
appropriate risk awareness, behaviours and judgements
in the level of risk we are willing to take. Our culture is
underpinned by an appropriate balance between risk and
reward, with accountabilities reinforced through the Senior
Managers and Certification Regime (SMCR). Risk objectives
are included in the executive non-financial scorecard:
the Risk Adjustment Framework for the Group’s senior
management functions and material risk-takers;
and, in 2023, we implemented a mandatory risk objective
for all colleagues irrespective of role type and level of
seniority. Risk culture was further promoted during the year
with extensive levels of training provided by the Enterprise
Risk team.
– Risk appetite: The Group defines its risk appetite as
the amount and type of risk the Group is prepared to
seek, accept or tolerate at any point in time. We have
risk appetite statements and preferences for all 12 of
our principal risks, which are reviewed annually and
approved by the Board. These statements are cascaded
into the sub-risk categories and supported by metrics,
thresholds and key risk indicators. Risk appetite measures
are reported and monitored on a monthly basis, with
actions taken where agreed thresholds are breached.
Risk appetite will be an integral part of the Group’s
strategic and business planning process for 2024, which
encompasses our philosophy to economic, regulatory,
commercial and customer outcomes.
– Risk governance: The Group has defined its risk
governance structure to strengthen its ability to identify,
assess, manage and report risks, while supporting the
Group in responding to the changing internal, external and
regulatory environments. The Board is responsible for the
effective management of risk and ensures the RMF is fit
for purpose and aligns to our risk appetite and strategy.
The Risk Committee and Executive Committee are the
committees most directly involved with risk management
governance and oversight activities (further details of
the Risk Committee’s remit can be found on pages 84 to
86). Below these, there are several committees across
the business that have been established to monitor the
principal and emerging risks, including the oversight of
a robust control environment and escalation of matters
through the risk governance structure.
– Three Lines of Defence: The Group operates a Three Lines
of Defence model to promote clear responsibilities and
accountabilities for risk management activities and to
support effective embedding. We apply an integrated
assurance approach, which combines the planning,
execution and issue management activities of assurance
teams operating across the Three Lines of Defence and
seeks to complement each other’s assurance activities.
Vanquis Banking Group plc Annual Report and Accounts 2023
46
Strategic Report
Risk management and principal risks continued
Recent developments
– A reduction in the Group’s TCR from the PRA to 11.9%
(previously 18.3%) in March 2023. The overall capital
requirement (OCR) reduced from 21.8% to 15.4%, which
included the regulatory combined buffer prevailing at the
time of 3.5% but excludes confidential buffers set by the
PRA and additional internal management buffers.
– Successful delivery of requirements to meet the FCA’s
Consumer Duty regulations in July 2023.
– Completed the Risk Harmonisation programme across the
Group, resulting in a more efficient and effective approach
to enterprise risk.
– Full implementation of the automated Group risk
management system.
– Enhanced our operational risk and control self-
assessment (RCSA) process.
– Enhanced our IFRS 9 models and the efficiency
of impairment provisioning process.
Future opportunities
– Recognising that credit risk is key to the achievement
of our strategic objectives, we will be investing in our
processes and people to enhance our capabilities.
– Following the completion of the Risk Harmonisation
programme, and with solid foundations for risk
management in place, we will lead a programme of
work during 2024 to further enhance our risk culture and
maturity and transfer full accountability to the First Line
of Defence.
– We will look to streamline our risk governance activities
between the Board and operational management as we
move from individual product management to a joined-
up customer proposition.
– We continue to progress with our Operational Resilience
programme to provide additional safeguarding to the
operation of our business and meet future regulatory
requirements.
– Technical debt will continue to be closely monitored and
addressed/upgraded where it is deemed essential or
beneficial to do so as focus remains on delivering the
new strategic platform for the Group.
Principal risks
Principal risks are risks which are most significant to Vanquis Banking Group’s strategy and business model and have formally
been articulated as part of its risk appetite framework. Principal risk categories and associated risk appetite statements are
reviewed and approved by the Board on an annual basis, effectively defining the Group’s overall risk appetite and recognising
changes to our risk profile.
The principal risks have been updated for 2024, recognising the evolution of the breadth and types of risks that the Group is
exposed to and reflective of the environment we currently operate in. Our principal risks and how we manage them are set out
below. In summary, our principal risks have remained largely stable year on year, albeit with volatility during H2 2023 following
the half-year results and actions taken in response.
Risk Pillar 1: Customer and conduct
We deliver fair customer outcomes and meet the expectations of our regulators.
Principal risk
P1
Customer
The risk of poor customer
outcomes due to poor
design, distribution
and execution of
products and services
or poor governance
and processes.
Key considerations
Our target customer cohorts require robust practices to support responsible lending for borrowers under financial
pressure and provide appropriate solutions to meet our customers’ needs. We continually seek improvement to our
product governance processes and customer outcome monitoring activity across the First and Second Lines of Defence,
and proactively provide compliance advice and guidance on key matters.
We continue to see a high volume of complaints driven by Claims Management Companies (CMCs), with one such
CMC accounting for 80% of the volume. CMCs are regulated by the Solicitors Regulation Authority and therefore do not
follow FCA guidelines. Due to this, we are witnessing poor practices, such as lack of customer due diligence on their
part, and the level of upheld complaints has been consistently low for both the Group and the Financial Ombudsman
Service (FOS).
Mitigating actions
– Customer, Culture and Ethics Committee oversaw the development, embedding and monitoring of the Group’s
customer objectives.
– The Group successfully delivered the requirements to meet the FCA’s Consumer Duty regulations in July 2023.
– Board-approved conduct risk framework and supporting metrics are embedded across the Group to ensure
delivery of good customer outcomes across all high-risk interactions, such as lending, forbearance, vulnerability
and complaints.
– A rigorous customer outcomes assurance activity programme is in place.
– A complaints methodology and forum have been established to identify and learn from complaints trends and FOS
referral outcomes.
– In November 2023, the FCA confirmed receipt of our update on queries relating to Borrowers in Financial Difficulty (BiFD)
action and acknowledged our ongoing progress to deliver the BiFD action plan.
Links to strategic
themes
21 54
Strategic themes
1
Customer centricity
2
Insightful risk
management
3
Efficient organisation
4
Digital, tech, data
and analytics
5
A great people
proposition
Vanquis Banking Group plc Annual Report and Accounts 2023
47
Governance Financial statementsStrategic Report Shareholder information
Risk Pillar 1: Customer and conduct continued
We deliver fair customer outcomes and meet the expectations of our regulators.
Principal risk
P2
Regulatory
The risk that our
systems and controls
do not support effective
regulatory compliance
and we fail to meet the
expectations of our
regulators.
Key considerations
As a dual regulated firm, we need to adapt to the regulatory environment as it continues to develop to ensure our
lending is sustainable, suitable and affordable. The PRA/FCA published ‘The Regulatory Initiatives Grid’ in November 2023
and it highlights a number of key initiatives that are being proposed for 2024/25. The current initiatives do not pose a risk
at this stage to the Group.
The FCA announced in January 2024 that it intends to review how motor finance firms have implemented a ban,
originally introduced back in 2021, on discretionary (variable) commission levels. The announcement does not impact
the Group directly as we do not pay discretionary commission currently or historically, only fixed, on our vehicle
finance products.
Mitigating actions
– SMCR responsibilities are aligned to the RMF and Group Delegated Authorities Manual (GDAM) providing a complete
and clear view of accountability, risk and control ownership and clarity around delegations and mandates for
approval. Senior management functions are required to attest to their understanding and agreement of these.
– Conduct and regulatory policies and procedures are in place to ensure the Group has appropriate controls and
processes to deliver fair customer outcomes.
– A compliance monitoring plan is in place, supported by a robust methodology, to independently assess the adequacy
and effectiveness of the control frameworks in place to drive fair customer outcomes and regulatory compliance.
– Strong and proactive regulatory relationships with regular lines of communication are in place with both the FCA
and PRA, who have been kept abreast of our strategic initiatives, key risk management activities and responses to
regulatory developments e.g. Consumer Duty implementation and BiFD action plan.
– Following the PRA’s Periodic Summary Meeting in March 2023, we have successfully completed all actions due for
delivery in 2023, with a small number to deliver in Q1 2024.
Links to strategic
themes
21 54
P3
Financial
crime
The risk that the Group’s
products and services
are used to facilitate
financial crime against
the Group, customers or
third parties.
Key considerations
Financial crime includes anti-money laundering (AML), counter terrorist financing (CTF), financial sanctions, external and
internal fraud and anti-bribery and corruption (ABC).
On average, we monitor 11 million transactions and 1.75 million customers each month for signs of financial crime. The
banking industry continues to suffer from organised crime groups socially coercing individuals into providing security
information, exposing them to fraud. In addition, the Group’s fraud exposure has increased as a result of the Group’s
changing risk profile due to an increase in brand prominence, the launch of digital wallets and higher average credit
limits/loan values offered to customers. Further technology developments are ongoing in support of our detection and
prevention objectives.
Mitigating actions
– Financial crime oversight has been consolidated across all products, implementing consistent risk oversight
supported by Group-wide AML, CTF, sanctions, fraud and bribery policies, overseen by a Group Money Laundering
Reporting Officer (MLRO).
– The Financial Crime Risk Forum provides oversight and challenge on the Group’s financial crime risk systems and
controls. The Group MLRO provides twice-annual updates to the Risk Committee.
– Industry-standard prevention and detection systems are in place covering fraudulent transactions, suspicious activity,
customer screening and application fraud. These are regularly reviewed and refined to ensure effectiveness.
– A Group-wide Fraud Strategy and Analytics team is in place within the First Line of Defence, which focuses on fraud
prevention, consistent and fair customer outcomes and loss mitigation.
– A detailed business-wide financial crime risk assessment is in place to measure financial crime risk consistently and
effectively. This is now being extended to cover the vehicle finance product.
– Oversight of our outsourced operations administering our savings products has been enhanced and the articulation
of the financial crime controls. All new products are subject to a financial crime risk assessment.
Links to strategic
themes
21 54
Vanquis Banking Group plc Annual Report and Accounts 2023
48
Strategic Report
Risk management and principal risks continued
Risk Pillar 2: Financial
We manage our credit risk exposures, supported by financial strength and liquidity in normal and stressed conditions.
Principal risk
P4
Capital
The risk that the Group
fails to maintain the
minimum regulatory
capital requirements,
management buffer on
a consolidated basis
to cover risk exposures
and withstand a
severe stress.
Key considerations
The Group and Bank maintain sufficient capital resources, both in terms of amount and quality, to support the business
strategy and provide a buffer for stress events. Throughout the year, the Group and Bank have maintained capital ratios
in excess of regulatory requirements (see capital risk management section on page 140 for the Group’s capital position).
In assessing the adequacy of capital resources, the Group and Bank consider the material risk to which they are exposed
and the appropriate strategies required to manage those risks.
The ‘Strong and Simple’ regulatory initiative will be monitored for any impacts on the Group’s and Bank’s management
of capital risk. The PRA is expected to begin consultation on capital requirements for simpler regime firms in Q2 2024.
The implementation of Basel 3.1 is expected to have limited impact on the capital position.
Mitigating actions
– The capital framework is reviewed by the Board as part of the annual Internal Capital Adequacy Assessment
Process (ICAAP).
– Capital risk appetite metrics are monitored by the Board, Risk Committee and Assets and Liabilities Committee (ALCO).
– Capital is held to meet Pillar 1 requirements, the most significant elements for the Group and Bank being credit and
operational risks.
– In addition, the PRA requires firms to hold capital to meet Pillar 2A requirements, as assessed in the ICAAP. This confirms
the amount of capital required to be held to meet risk partially covered by Pillar 1 and risk not covered by Pillar 1. The
combination of Pillar 1 and Pillar 2A requirements forms the TCR.
– To protect against consuming its TCR, firms are also subject to regulatory capital buffers and the PRA may set an
additional firm-specific PRA buffer, forming the OCR.
– In March 2023, the Group announced a reduction to its TCR from the PRA to 11.9% (previously 18.3%). The OCR reduced
from 21.8% to 15.4%, which included the regulatory combined buffer prevailing at the time of 3.5% but excluded
confidential buffers set by the PRA and additional internal management buffers.
– The Group’s Pillar 3 disclosures for the year ended 31 December 2023 are published separately on the Group’s website.
Pillar 3 complements Basel’s Pillar 1 and 2 framework and seeks to encourage market discipline by developing a set of
disclosure requirements, which would allow market participants to assess key pieces of information on a firm’s capital,
risk exposures, risk management processes, leverage and remuneration.
Links to strategic
themes
3
P5
Funding and
liquidity
The risk that the Group
has insufficient financial
resources to meet its
obligations (cash or
collateral requirements)
as they fall due, resulting
in the failure to meet
regulatory liquidity
requirements, or is
only able to secure
such resources at
excessive cost.
Key considerations
The Group and the Bank maintain sufficient liquid assets both in terms of amount and quality, to meet daily cash flow
needs and stressed scenarios driven by the Group’s own risk assessment and regulatory requirements. Throughout the
year, the Group and Bank have maintained funding and liquidity ratios in excess of regulatory requirements. Liquid assets
solely comprise of reserves held with the Bank of England (see liquidity risk management section on pages 136 to 138).
The ‘Strong and Simple’ regulatory initiative will be monitored for any impacts on the Group’s and Bank’s management
of funding and liquidity risk. Changes announced to date have limited impact on the management of this risk, which are
due to go live throughout H1 2024.
Mitigating actions
– The funding and liquidity framework is reviewed by the Board as part of the annual Internal Liquidity Adequacy Assessment
Process (ILAAP). ALCO is responsible for managing the balance sheet structure, including the funding plan and its risks.
– To ensure that there is no significant risk that liabilities cannot be met as they fall due, business cash flows are managed
and stress tested. The Group and Bank maintain liquid asset buffers of at least 100% of the anticipated outflows seen under
internal stress test scenarios (90-day stress) and the regulatory prescribed liquidity coverage ratio (30-day stress).
– Funding and liquidity metrics are monitored through daily liquidity reporting, reported monthly at ALCO meetings and
quarterly to the Risk Committee and Board.
– Throughout the year, the Group has moved to a more retail deposit source of funds, having successfully repaid maturing
wholesale funding sources. Additionally, the Bank has demonstrated that it continues to have access to the retail deposit
market through fixed-rate deposits. The Group has worked closely with our third-party provider, Newcastle Strategic
Solutions Limited, to make operational improvements and has broadened the range of retail products it offers to include
30-day and 90-day notice accounts. The Bank will continue to ensure it has sufficient and diverse access to retail
deposit markets.
Links to strategic
themes
3
P6
Market
The risk that the net
value of or net income
arising from assets and
liabilities are impacted
as a result of changes in
market prices or rates,
specifically interest
rates, currency rates or
equity prices.
Key considerations
The Group and the Bank do not take significant unmatched positions and do not operate trading books. Some financial
assets and liabilities are linked to an underlying index, such as Sterling Overnight Index Average (SONIA) or Bank of
England base rate. The principal market risks the Group and Bank are exposed to are interest rate risk and basis risk
(see market risk management section on pages 138 and 139).
Mitigating actions
– The Group and the Bank use interest rate sensitivity gap analysis to inform them of any significant unmatched
positions.
– The increased quality of interest rate risk in the banking book (IRRBB) management and the capability to transact
external and internal interest rate swaps have significantly enhanced the monitoring and management of market risk.
– The market risk position is reported monthly to ALCO and includes risk appetite metrics set for earnings at risk, market
value sensitivity, economic value of equity and basis risk. This includes the risk under different interest rate risk scenarios
as prescribed by regulation.
– The Group and the Bank have limited appetite for market risk, which is only taken if essential to core business activities.
Links to strategic
themes
3
Principal risks continued
Vanquis Banking Group plc Annual Report and Accounts 2023
49
Governance Financial statementsStrategic Report Shareholder information
Risk Pillar 2: Financial continued
We manage our credit risk exposures, supported by financial strength and liquidity in normal and stressed conditions.
Principal risk
P7
Credit
The risk of unexpected
credit losses due to
customers failing to
meet their contractual
obligations.
Key considerations
The Group is exposed to credit risk at all stages in the customer lifecycle, which can fluctuate from the point of application
and various stages through the agreement. Credit risk is impacted by a number of factors outside of the Group’s control,
including wider economic conditions.
The Group’s credit quality has progressively and materially improved over the year, partly due to the strategy
enhancements, improvements in credit decisioning and processes, and targeted credit tightening in response to market
and regulatory changes. As a result, overall average customer quality has improved and unit delinquency rates are lower
than pre-Covid-19 (see credit risk management section on page 136).
Mitigating actions
– Credit risk is managed within a formal credit risk management framework, consisting of Board-approved risk appetite,
credit policies and RCSA.
– The Group Credit Committee assists the Chief Risk Officer in execution of their delegated authorities in overseeing the
credit risk management of our portfolios.
– Main credit scorecards continue to be redeveloped based on enhanced modelling approaches and upgraded data sets.
– Credit and affordability strategies continue to be adjusted according to the changing market and economic
conditions and tightened where appropriate.
– Portfolio performance monitoring continues to be enhanced to capture newly emerging risks.
– Credit data and management information continue to be augmented by newly available data sources, including the
most up-to-date credit reference data and open banking insights sourced through Snoop.
– IFRS 9 models and impairment provisioning processes have been redeveloped with enhanced oversight from the
Model Governance Committee.
Links to strategic
themes
21 4
Risk Pillar 3: Operational
We ensure operational risk is minimised through effective people, processes and systems aligned to our strategic goals.
Principal risk
P8
Operational
The risk of loss resulting
from inadequate or
failed internal processes,
people and systems or
from external events.
Key considerations
Operational risk is inherent to our Group’s activities and can crystallise in the form of interruption or degradation in the
performance or capacity of our technology applications and operational infrastructure. Our inherent operational risk is
heightened as we deliver our activities through a multi-site and hybrid colleague working approach, utilising in-house
capability, third-party and offshore business support. During 2023, we increased customer operation activity with our
existing offshore partners.
Whilst it is not possible, nor cost effective, to fully eliminate operational risk, failure to build resilience and recovery
capabilities into business processes can result in customer detriment, loss and reputational damage.
Mitigating actions
– The Group’s Three Lines of Defence model ensures there are clear lines of accountability between management
which owns the risks, oversight by the Risk function and independent assurance provided by Internal Audit. The model
provides continuous integrated assurance over the effectiveness of key controls and swift response and remediation
to issues if they arise, supported by an automated and integrated risk management system.
– Operational risk is overseen by the monthly Operations Risk Forum, with clear lines of escalation.
– The RMF has been enhanced to drive improvement of operational risk management assurance activity e.g. RCSA,
controls testing programme, risk event management and key risk indicators.
– An Operational Resilience programme is established and on track for regulatory deadlines and continues to test
against important business services impacting scenarios.
– A fully implemented supplier management model is in place with a supporting third-party risk management
framework being embedded throughout 2024.
Links to strategic
themes
21 43
P9
Technology
and
information
security
The risk arising from
compromised or
inadequate technology,
security and data
that could affect the
confidentiality, integrity
or availability of the
Group’s data or systems.
Key considerations
The Group continues to operate on legacy IT architecture, which is being addressed by a strategic IT transformation
programme. The Group is also progressing its delivery of key security improvement initiatives against the overall cyber
security strategy, with a budgeted plan to continually improve its overall security posture.
Mitigating actions
– Technology and change operating model has been revised into a leaner state to reflect the Group’s reprioritisation of
strategic initiatives, which will utilise the Gateway single technology platform and address key areas of technical debt.
– Technology and information security risk is overseen by the Technology and Change Management Committee, which
also monitors and addresses the IT services provision and performance for continuous improvement.
– A Zero Trust/E5 Programme has been initiated, which is designed to deploy protection and defence against our
endpoints, mobile devices and servers, whilst generating a consistent security logging and event alerts for analysis
and response.
– Cyber initiatives are currently focused on improving areas identified from the voluntary Red Test exercise carried out in
H2 2023. Conducting a threat intelligence-led Red Team Test is a recommended action that the Bank of England and
the PRA have within the CBEST supervisory tool kit to assess the cyber resilience of firms’ important business services.
– IT control effectiveness and risk maturity have been significantly improved following the completion of the IT First Line
Control Review and the transition of risk and control ownership into business as usual activity via the use of the Group’s
risk management system.
Links to strategic
themes
41
Vanquis Banking Group plc Annual Report and Accounts 2023
50
Strategic Report
Risk management and principal risks continued
Risk Pillar 3: Operational continued
We ensure operational risk is minimised through effective people, processes and systems aligned to our strategic goals.
Principal risk
P10
People
There is a risk that
we have insufficient
operational capacity
and colleagues with the
right skills in meeting
our financial, customer
and regulatory
responsibilities.
Key considerations
The Group has undergone a significant centralisation programme and extension of our offshore capability, which
has led to a reduction in overall headcount as we seek to become leaner, more efficient and effective in serving our
customers. It is essential we have effective leadership to manage colleague resources, effective talent and succession
management and promote colleague engagement and wellbeing.
A colleague survey was conducted on our behalf by Great Place to Work in December 2023. We scored 56% for our
overall colleague engagement score, which is reflective of the extent of change in Q4 2023. Further details can be found
on page 16.
Mitigating actions
– Changes to our operating model are subject to a structured programme of risk management and governance
to minimise operational disruption and promote colleague wellbeing.
– We have partnered with Great Place to Work to support our colleague engagement and culture agenda.
– We have and maintain management responsibilities maps and succession plans, which are in place for executive
management and senior colleagues.
– Consistent frameworks have been embedded for Group reward, performance management and talent
management.
Links to strategic
themes
21 53
Risk Pillar 4: Strategic
We seek new business opportunities, which are aligned to our customer, regulatory and commercial objectives.
Principal risk
P11
Strategic
performance
The risk of making and/
or executing poor
strategic decisions
related to acquisitions,
products, distribution
etc. as a result of
ineffective governance
arrangements,
processes and controls.
Key considerations
The Group is initiating a strategic redirection, which seeks to strengthen and grow the business in an effective and
sustainable manner, meeting the needs of all our stakeholders. Effective risk management is critical to both the
delivery of strategy and maintaining our existing commitments in a safe and controlled way.
Mitigating actions
– The Board and its sub-committees make risk-based decisions in the formulation of their business strategy, in line
with the GDAM and risk appetite framework and subject to independent oversight from the Risk function.
– Strategic and emerging risks are reported to the Risk Committee and Board. Throughout the year, the CRO has
highlighted a significantly high level of change across the Group to both its strategic objectives and operating
model, and the broader plans in place to stabilise the business, which has increased strategic performance risk and
thus remained a key focus.
– The Risk function has had an active role providing oversight, challenge and support to the range of strategic
initiatives that have been implemented during the year, which encompass the offshoring of aspects of customer
services, the reduction in the Group’s TCR, the delivery of Gateway across the Group and, more recently, the strategy
development.
– The Group continues to quantify the actual and potential impacts of climate-related risks and opportunities on our
business, strategy and financial planning. ICAAP activity takes account of material climate-related financial impacts,
meeting PRA requirements. Further detail of the governance and management of the climate-related risks and
opportunities and our TCFD disclosure can be found in the sustainability section from page 19.
Links to strategic
themes
31
P12
Model
The risk of financial
losses where models fail
to perform as expected
due to poor governance
(including design and
operation).
Key considerations
Models are widely used across the Group and play an important role in helping achieve key business decisions, risk
management and strategic objectives. The use of models carries inherent risk to the Group due to their underlying
assumptions, methodologies and complexities. Effective model governance, oversight and validation of models are
key in mitigating model risk across the Group.
Mitigating actions
– A model risk management framework, policies and standards are in place and align with the PRA’s Model Risk
Management Principles.
– A Model Risk Committee has been established to provide model risk oversight with supporting technical forums
created to review model developments and model performance monitoring across the Group.
– A model inventory is in place and reviewed on a regular basis.
– Material models are independently validated and corresponding validation findings and actions are
regularly tracked.
– Planned enhancements to existing IFRS 9 models and the model monitoring framework have been completed.
Links to strategic
themes
32
Principal risks continued
Vanquis Banking Group plc Annual Report and Accounts 2023
51
Governance Financial statementsStrategic Report Shareholder information
Viability statement
In accordance with the 2018 FRC Corporate Governance Code,
the directors confirm that they have a reasonable expectation
that the Group will be able to continue to operate and meet
its liabilities as they fall due over the next three years to
31 December 2026 (the Viability Period). The Viability Period
represents the period over which the Board has a reasonable
degree of confidence over anticipated events, including
prospects for the macroeconomy, and also provides an
appropriate outlook over the medium to long term.
In making the Group viability statement, the directors have
made an assessment of the Group’s current financial position
and prospects, as outlined within the Strategic Report,
together with the principal risks and other factors likely to
affect the Group’s future performance and development. This
assessment is made following consideration of a wide range
of information, including:
– the Group’s corporate plan, updated in 1Q24 to capture
latest outer year projections, which sets out financial,
capital, liquidity and funding projections, together with an
overview of relevant risks;
– the principal and emerging risks which could impact the
performance of the Group;
– a severe but plausible stress testing scenario, which
is designed to assess the potential impact of certain
underlying risks on the Group’s capital and funding
resources, together with the availability and effectiveness
of mitigating actions; and
– reverse stress testing analysis, which is designed to assess
the point at which the Group is no longer a viable concern.
The Group’s corporate plan was approved by the Board in
March 2024. In doing so, the Board has reviewed detailed
forecasts for the three-year period to December 2026 and
also considered less detailed forecasts for 2027 and 2028.
These higher-level, outer year forecasts do not contain any
information which would cause different conclusions to be
reached over the longer-term viability of the Group.
The Group’s annual planning process takes into account
the Group’s strategic objectives and business model. The
business model focuses on relatively short-term lending
to consumers and operates conservative underwriting.
The plan makes certain assumptions about the regulatory
environment, future economic conditions and anticipated
changes within the markets in which the Group operates and
also makes an assessment of the Group’s ability to fund new
business growth.
The Board obtains independent assurance from Group Risk
over the alignment of the corporate plan with the Group’s
strategy and the Board’s risk appetite. Specific focus is
placed on capital risk as well as liquidity and funding risk. The
assessment also considers the key risks which may impact
delivery of the Group’s operating plan. The Group’s principal
risks are included on pages 46 to 50.
The corporate plan is based on a macroeconomic scenario
which was in line with market consensus estimates and which
assumes that the UK economy would remain weak, with
expectations of relatively flat GDP through 2024 driven by a
sustained elevated UK Bank Rate and a higher tax burden.
Inflation is expected to remain at ~4% in early 2024 before
subsequently falling through the second half of 2024 and
beyond. The plan assumes that the UK unemployment rate
rises in 2024 and 2025, peaking above 5% in 2026.
The Board conducts a number of specific reviews of the
corporate plan provided by Group and divisional management,
alongside other regular briefings on and discussion of new
strategies, business developments and current financial
performance. These reviews consider a range of market
opportunities and developments, together with associated
risks from within the Board’s risk appetite framework.
The Group manages its liquidity to meet the Overall Liquidity
Adequacy Rule (OLAR) and to ensure that it can meet its
liabilities as they fall due. The level of liquidity required by
the OLAR is determined by the Internal Liquidity Adequacy
Process Assessment (ILAAP) and is based on an analysis of
the Group’s business as usual forecast cash requirements
but also considers their predicted behaviour in stressed
conditions. In recognition of the waiver received in November
2022, which allows Vanquis Bank Limited to fund the vehicle
finance business, the ILAAP also includes an assessment
of the liquidity needs of the wider Non-Bank Group. The
Group has sufficient access to liquidity resources, including
retail deposits, secured funding on its assets and access to
wholesale markets. Furthermore, the Group has plausible
options available to it, should the need arise, to either reduce
the liquidity requirements or increase the amount of liquidity it
has (or can raise).
The corporate plan has been stress tested using a severe
macroeconomic scenario which is broadly consistent with
the “rates-up” scenario published by the PRA on 14 October
2022. The stress test scenario envisages that the UK economy
enters a period of stagflation in 2023 with inflation rising to
approximately 8.6% and the UK Bank Rate rising to 6.75%. As a
result, the UK unemployment rate rises to approximately 8.1%.
The stress test scenario takes into account the availability
and effectiveness of mitigating actions which could be
taken by management to avoid or reduce the impact of
the macroeconomic stress. These management actions
could include but are not restricted to restricting variable
pay, reducing lending growth, and/or changing the dividend
payout. The corporate plan has also been reverse stress
tested to the point of non-viability after reflecting available
mitigating actions. The viability assessment concluded
that the Group’s viability only comes into question under an
unprecedented macroeconomic scenario.
The directors also considered it appropriate to prepare the
financial statements on the going concern basis, as set out
on page 92 and page 129.
Vanquis Banking Group plc Annual Report and Accounts 2023
52
Governance
Chairman’s introduction to governance
Dear Shareholder
I am pleased to introduce the Corporate Governance Report
for 2023 on behalf of the Board, my first as Chairman, having
joined the Board as a non-executive director in April 2023 and
taking over as Chairman in September 2023. I am delighted
to have joined Vanquis Banking Group and look forward to
working with, and supporting Ian, the executive team and our
colleagues to deliver on our Purpose.
I have spent time getting to know people across the business,
and have been greatly impressed by the calibre of our
employees and the collegiate culture as we set out to achieve
our refreshed strategic ambitions. You can read in detail
about our story and our strategy in our Strategic Report on
pages 1 to 31. 2023 has been a challenging year for the Board
and executive team. Externally with economic uncertainty,
including a steep rise in interest rates, we were, and remain,
mindful of the challenges these factors pose for our
customers. The rise, particularly in the fourth quarter of 2023,
of speculative complaints from CMCs has created additional
headwinds. Nevertheless, we remain focused on supporting
our customers well and providing products and services that
deliver good customer outcomes. Alongside this, we have
sought to re-instil an appropriate operating discipline. We are
not a social enterprise, but a commercial organisation with
the ‘S’ in ESG at the core of our business.
The following pages explain the Group’s governance structure
and key activities undertaken by the Board and its committees
during the year in order to ensure effective decision making
and oversight of our strategy, business model and performance.
The report also describes how we have applied and complied
with the UK Corporate Governance Code 2018 (the Code)
during the year.
Our Purpose and culture
At the heart of everything we do is our Purpose, to deliver
caring banking so our customers can make the most of life’s
opportunities. In late 2023 we announced we were conducting a
strategy review and would inform stakeholders of the outcome
of the review as part of our results process in March 2024.
The strategy review looked at our Purpose, and it has been
refreshed to reflect the changes we have made, and will now be
embedded in the Group, and its culture, as we start to implement
our strategy in 2024.
I am pleased to report that we delivered our Consumer Duty
Programme including the Governance workstream which
delivered enhancements to our reporting to ensure that
the customer and customer outcomes are ever present in
This report explains the main aspects of the Company’s
governance structure to give a greater understanding of how
the Company has applied the principles and complied with the
provisions of the Code. The Corporate Governance Statement
also explains compliance with the FCA’s Disclosure Guidance
and Transparency Sourcebook. The UK Corporate Governance
Code is published by the Financial Reporting Council (FRC) and is
available on its website, www.frc.org.uk. The Board considers that
for the year ended 31 December 2023 the Company complied
in full with the provisions of the 2018 UK Corporate Governance
Code (the Code). Further information on the Company’s corporate
governance arrangements and compliance with the Code can be
found as follows:
Page
Code
principles
Board leadership and Company Purpose 52
Chairman’s introduction to governance 52
Our Board 54 A
Setting our strategy 57 C
Promoting long-term sustainable success:
Board focus areas during 2023 59 A
The Board: our culture 61 B
Stakeholders and decision making 63
Stakeholder engagement
and decision making 63 D, E
Effective engagement with shareholders
and stakeholders: investor relations 67 D
Division of responsibilities 68 F, G, H, I
Composition, succession and evaluation 70
Board composition 70 J, K
Director induction and training 71
Assessing Board performance - annual
Board evaluation 71 L
Nomination Committee Report 73 J, K
Customer, Culture and Ethics
Committee Report 78 B, D
Audit, risk and internal control 80
Audit Committee Report 80 M, N
Risk Committee Report 84 O
Directors’ Report 87
Directors’ Remuneration Report 93 P, Q, R
“
It has been a year of change and
challenge. As I commence my
tenure as Chair, I am encouraged
by the focus on strategic clarity and
operational discipline, supported by our
governance and culture, which aims to
deliversustainablesuccessforthebenefit
of all stakeholders.”
Sir Peter Estlin
Chairman
Vanquis Banking Group plc Annual Report and Accounts 2023
53
Governance Financial statementsStrategic Report Shareholder information
our decision making. The Group has been working towards
better integrating its businesses for some time and this year
we took a major step toward this with the appointment of
a Chief Customer Officer. Jill Armstrong joined the Group in
this role in early 2024 to support the development of a clear
and consistent customer proposition across all our products.
You can read more about how we support our customers on
pages 9 to 11 and 29 to 31 of our Strategic Report.
Our inclusion and diversity ambition remains to build and
sustain an inclusive culture and diverse workforce which
will help us to respond to the needs of our diverse customer
base and support our Purpose. I have been impressed by
the Group’s now well-established inclusion and diversity
framework; the high levels of colleague engagement with the
Affinity Groups encourage open conversations and sharing
of ideas.
You can read more about the Board’s role in shaping and
overseeing our culture during 2023 on pages 61 and 62 and
in our CCE Committee Report on page 78. You can also
read about the Board’s activities in relation to the oversight
of inclusion and diversity in our leadership team and
wider workforce in our Nomination Committee Report on
pages 73 to 77.
Board composition, succession and
effectiveness
There were a number of Board changes in 2023 in addition to
my appointment. In August 2023, Ian McLaughlin joined the
Board as Chief Executive Officer and member of the Board.
Ian is a highly experienced banking CEO and has a strong
track record of delivering growth through improving customer
service and enhancing distribution throughout his extensive
financial services career in consumer finance. Dave Watts
joined as Chief Financial Officer in November 2023 and is an
experienced CFO with extensive banking knowledge. Michele
Greene joined as non-executive director in March 2023 and is a
member of the Nomination and Risk Committees. You can read
more about Ian’s and my appointments and the Nomination
Committee’s work on pages 73 to 77.
Andrea Blance, our Senior Independent Director (SID), stepped
down at the end of January 2024 after seven years of service
and Angela Knight, a valued member of the Board and Chair
of the Risk Committee, has taken on the role of SID. I would like
to thank Andrea for her dedicated service to the Group since
her appointment and for leading the recent Chair succession
and appointment process. A number of our non-executive
directors are approaching the end of their second three-year
terms in 2024 and as such the Nomination Committee has
been taking actions to ensure proactive and robust plans are
in place for succession. At its meeting held on 26 March 2024,
the Board noted that Elizabeth Chambers and Margot James
had decided to step down from the Board with effect from
15 May 2024 and would accordingly not submit themselves
for re-election at the 2024 AGM. I wish to thank them for their
valued contribution to the Board during their tenures. At their
26 March 2024 meetings, the Nomination Committee and
Board approved the appointments of Karen Briggs, Oliver Laird
and Jackie Noakes as non-executive directors with effect from
27 March 2024. Karen, Oliver and Jackie will submit themselves
for election at the 2024 AGM. You can read their biographies on
our website and in the 2024 AGM Notice when published, and we
will report on their appointment processes in next year’s report.
Diversity and inclusion also continues to be a focus area for our
Nomination Committee when reviewing our Board composition,
talent and succession plans. You can read more about both
these activities in the Nomination Committee Report.
This year the Board undertook an internally facilitated
performance review, the results of which are discussed on
pages 71 and 72 alongside progress that we have made
to address our 2022 review actions. Several strengths were
noted in the report, including that of the Board committees,
which continue to remain fit for purpose. The Board is keen
to ensure that a simple, purposeful and efficient governance
structure is maintained and agreed to reduce the size of the
Board to nine members over time, whilst ensuring the Board
has the appropriate balance of skills, experience and diversity.
Following the positive progress made by the Customer Culture
and Ethics (CEE) Committee, oversight of the areas within the
CCE Committee’s remit have been moved to the Board and
other Board committee agendas. Our new NEDs bring strong
technology, operations, risk and audit skills as identified in our
Board Skills Matrix.
Effective risk management and governance
The Board, through its Risk Committee, has paid particularly
close attention to strategic performance risk as a result of
significant changes taking place in the Group during the
year. The Risk Committee received enhanced risk reports
throughout the year and will continue to be mindful of the
financial challenges facing our customers. With strategic
performance risk top of mind, the Risk Committee has
requested specific second and third line assurance over
prominent projects.
Our principal risks were updated during 2023 recognising
the evolution of the breadth and types of risks the Group is
exposed to and its operating environment. A description of the
Group’s principal risks and mitigating actions can be found on
pages 44 to 50.
The Group’s Risk Harmonisation programme concluded in
December 2023 and is delivering on its objective to provide an
integrated and stable approach to risk management across
the Group. You can read more about risk management and
our principal and emerging risks and mitigations, on pages
44 to 50. The report from our Risk Committee can be found on
pages 84 to 86.
Growth and sustainability
The Board continues to provide oversight and challenge to the
executive team to ensure the Group’s strategy is truly purpose
driven, achievable and ultimately delivered. You can read
more about how we have overseen strategy on pages 57 to 58
and about our principal decision on the acquisition of Snoop
on page 41.
Stakeholders and section 172 of the
Companies Act 2006
Effective engagement with our stakeholders, employees
and wider stakeholders is key to sustainable success. Under
section 172 of the Companies Act 2006, directors must act in
a way they consider in good faith, would be likely to promote
the success of the Company for the benefit of its shareholders
as a whole. In its decision making, the Board also considers
wider stakeholder interests. Our Section 172 Statement,
which explains how the directors have discharged their
responsibilities during the year under review, can be found
on pages 40 and 41.
For further information on environmental, social and
governance (ESG) matters, please see our Sustainability Report
and Task Force on Climate-related Financial Disclosures (TCFD)
on pages 14 to 28.
Annual General Meeting
Our AGM will be held at 3.30pm on 15 May 2024 at the offices
of Clifford Chance LLP, 10 Upper Bank Street, Canary Wharf,
London, E14 5JJ. I look forward to meeting shareholders at
the AGM, together with my fellow directors.
Sir Peter Estlin
Chairman
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
54
Governance
Our Board
Sir Peter Estlin
Chairman
N
Appointed as Chairman: 15 September 2023
Joined the Board: 19 April 2023
Tenure: Less than 1 year
Career and experience:
Peter is a senior finance professional with a
35-year career in banking and finance with PwC,
Citigroup and Barclays. Peter was knighted in
2020 for his services to international business,
skills and inclusion, he also served as the 691st
Lord Mayor of the City of London from 2018
to 2019. In 2013, Peter stood for election as an
Alderman for the City of London, a role he
still holds today. He qualified as a Chartered
Accountant with Coopers & Lybrand in 1993,
where he later became a Partner, before joining
Citigroup where he held the role of CFO for the
Asia Pacific and, latterly, the Global Corporate
and Investment Bank businesses. From 2008
Peter held senior roles at Barclays plc including
Group Financial Controller, CFO of the Retail and
Business banking division and acting Group CFO.
Peter’s contribution to the Board, key
strengths, skills and reasons for election:
Peter is a commercially and strategically
astute CFO and non-executive director who
brings both breadth and depth of banking
experience, including retail banking, and is an
experienced Chair.
– A strong leader with significant finance and
accounting experience gained in professional
services and banking, further complemented
by expertise across systems management,
financial reporting and accounting, investor
relations, treasury management, and
mergers and acquisitions.
– Extensive governance experience having
served on the boards of commercial
companies, government bodies and
numerous charitable foundations.
– Wealth of knowledge of the financial markets
and experience implementing strategy,
including significant corporate transaction
work and execution of transformation projects.
– Experienced non-executive director and chair.
Current external appointments:
– Non-Executive Director of Rothschild & Co,
NM Rothschild and WAM Co Rothschild.
– Chair of FutureDotNow.
– Non-Executive Director of the Institute
for Apprenticeships and Technical
Education (IfATE).
– Trustee at Ironmongers Trust Company.
– Chair of Association of Apprentices.
– Alderman for City of London Corporation.
Ian McLaughlin
Chief Executive Officer
D
Appointed: 1 August 2023
Tenure: Less than 1 year
Career and experience:
Ian has extensive banking experience across
mortgages, wealth management, savings,
insurance and motor finance. From 2019,
Ian was the CEO of Bank of Ireland UK Plc. He
has served as a non-executive director on
bank and technology company boards and
from 2012, held senior retail banking roles at
Royal Bank of Scotland (now NatWest Group)
including developing specialist consumer and
commercial financial services propositions.
Ian spent his earlier career at Lloyds Banking
Group and Zurich Financial Services.
Ian’s contribution to the Board, key strengths,
skills and reasons for election:
Ian is a highly experienced Chief Executive
Officer and board director with extensive
experience in banking and investment
management. He has a strong track record of
delivering growth through improving customer
service and enhancing distribution volumes
and channels.
– A deep knowledge of the financial services
industry and regulatory environment.
– Experience in managing complex
transformation programmes, providing
clarity on strategy, Purpose and culture, whilst
overseeing successful operational delivery.
– Delivering market leading customer
propositions that provide excellent
customer outcomes.
– Leading brand, product and proposition
development.
– In-depth understanding of UK and European
regulatory landscape.
– Non-executive director experience.
Current external appointments:
– None.
Dave Watts
Chief Financial Officer
D
Appointed: 1 November 2023
Tenure: Less than 1 year
Career and experience:
Dave is a highly experienced banking CFO who
worked for HSBC for nearly 30 years in a variety
of roles at global, regional and business level.
He notably established the finance function
for the UK ring fence bank of HSBC and was
subsequently the UK CFO and an Executive
Director of HSBC UK Bank plc from 2017-2021.
Most recently, Dave served as CFO and Executive
Director of HSBC Bank plc, which managed
HSBC’s business in Europe (ex. UK). Between
2015 and 2018, he was the CFO of HSBC Bank
plc. Dave’s prior roles were outside of personal
banking and wealth, including global CFO
roles for commercial banking, global banking,
operations and technology. Dave qualified as
a Chartered Accountant with KPMG and is also
a qualified treasurer.
Dave’s contribution to the Board, key
strengths, skills and reasons for election:
Dave has over 35 years of financial services
experience. He has a proven track record
executing strategy while supporting both the
business and support functions, delivering
on significant challenging multi-year
transformations and projects while enhancing
engagement with all stakeholders.
– A highly experienced finance leader with
extensive banking experience.
– A strong treasury background with
experience in challenging liquidity, funding
and capital matters, in entities with differing
regulatory requirements.
– A proven track record of enhancing
engagement and relationships with various
external stakeholders, including regulators.
– A strong cost management capability
having led numerous cost management
and reporting initiatives.
– Non-executive director experience.
Current external appointments:
– Non-Executive Director of CAF Bank.
Board of Directors
Vanquis Banking Group plc Annual Report and Accounts 2023
55
Governance Financial statementsStrategic Report Shareholder information
Committee key:
A
Audit Committee
C*
Customer, Culture and Ethics Committee
D
Disclosure Committee
N
Nomination Committee
Re
Remuneration Committee
Ri
Risk Committee
Committee Chair
Elizabeth Chambers
Independent Non-Executive Director
C*
N
Ri
Appointed: 31 July 2018 (to stand down on
15 May 2024)
Tenure: 5 years
Career and experience:
Elizabeth is an experienced board director,
senior financial services executive, strategist
and marketing leader in the UK and globally.
Her previous board experience includes being
a Non-Executive Director at Hastings Group
plc, Dollar Financial Group, Hibu plc (formerly
Yell Group) and The Home and Savings Bank.
Elizabeth served on the board of Western Union
International Bank as Chief Strategy, Product
and Marketing Officer and boards relating
to consumer finance joint ventures between
Barclaycard and other brands, such as Argos
and Thomas Cook. She has extensive executive
experience through roles including Chief
Marketing Officer at Barclays and Barclaycard,
Enterprise Marketing Executive at Bank of
America and Partner at McKinsey & Company.
Elizabeth’s contribution to the Board, key
strengths, skills:
Elizabeth brings more than 30 years of experience
in strategy, marketing and product development
across a range of financial services. As an
executive, she has a long track record of driving
revenue growth and solving complex business
challenges at major global financial institutions.
In various roles she has led businesses through
brand and reputation transformations,
strengthened customer acquisition and
engagement, built innovative digital businesses,
and led major business turnarounds.
– C-suite marketing and communications
executive, board director and strategist.
– Proven people leader.
– Broad and deep knowledge of financial
services, including credit cards and
payments products, a wide range of
customer loan segments and marketing
in a regulated environment.
– Substantial expertise in turnarounds, as well
as M&A and cultural change.
– Wide exposure to international operations
and the unique challenges of leading them.
Current external appointments:
– Non-Executive Director of Wise Plc.
– Non-Executive Director of TSB Bank Plc.
– Non-Executive Director at Evelyn Partners and
its subsidiaries.
– Non-Executive Director at Currensea Limited.
– Operating Partner for Searchlight Capital and
its portfolio companies.
– Non-Executive Director of University of
Colorado Health Authority (non-profit).
Paul Hewitt
Independent Non-Executive Director
A
N
Ri
Appointed: 31 July 2018
Tenure: 5 years
Career and experience:
Paul is an experienced chief financial
officer, chairman, non-executive director
and audit committee chair who operates
in a number of different sectors. Paul’s past
non-executive director roles include chairing
the audit committees of Tokio Marine, Kiln,
NEST Corporation, Tesco Bank, Collins Stewart
Hawkpoint and Charles Taylor Plc. He began
his executive career in finance, working for
over 20 years as a finance director of various
companies, culminating in becoming
Deputy Group Chief Executive and CFO of the
Co-operative Group between 2003 and 2007.
Paul’s contribution to the Board, key
strengths, skills and reasons for re-election:
Paul’s varied and wide-ranging career is built
on a successful career in finance. He has a
track record of creating and realising value
for shareholders and has worked across a
number of sectors including financial services,
technology, healthcare, retail and business
services. Through his non-executive roles
he has helped several management teams
adapt their business models to respond to,
and anticipate, changes in their competitive
and regulatory environments. In both his
executive and non-executive career he has
had extensive experience of transactions and
ensuring that businesses have an appropriate
financial structure.
– Experienced non-executive director,
chairman and chief financial officer.
– Broad experience of the financial services
industry and the regulatory environment.
– Strong track record in delivering good returns
for shareholders.
– Extensive experience of transactions.
– Broad experience as both an executive
and a non-executive of developing and
challenging business strategies.
– Has helped several management teams
adapt business models in anticipation of
changes in their environments and markets.
Current external appointments:
– Non-Executive Director of Trust Alliance Group
Limited.
– Non-Executive Director of ICNH Limited
(trading as DrDoctor).
– Non-Executive Director of Optalitix Limited.
– Non-Executive Director of Previsico Limited.
Angela Knight
Senior Independent Non-Executive Director
A
N
Ri
Appointed: 31 July 2018
Tenure: 5 years
Career and experience:
Angela has extensive experience in both the
public and private sectors. Prior to joining the
Board, Angela was CEO at Energy UK, the British
Bankers Association (BBA, now UK Finance) and
APCIMS (now Personal Investment Management
and Financial Advice Association). She was
previously a Member of Parliament and Treasury
Minister between 1992 and 1997 and was the
Chairman of the Office of Tax Simplification from
December 2015 to March 2019. Previously Angela
was also a Non-Executive Director at Taylor
Wimpey plc and Senior Independent Director
at TP ICAP plc.
Angela’s contribution to the Board, key
strengths, skills and reasons for re-election:
Her experience in the public sector means
Angela has a strong understanding of the
expectations of regulators and other public
stakeholders. This combination means
she is a skilled director who knows how to
manage organisations and how to challenge
management to deliver. Angela’s thought
leadership, and technical and policy skills, as
well as a deep understanding of the financial
sector, are demonstrated through her leadership
of the repositioning of Energy UK in the energy
sector and of the BBA through the banking crisis.
– Experienced Government Minister, CEO, chair
and non-executive director.
– Wealth of knowledge of the financial
services sector.
– Deep knowledge of regulated industries.
– Adept at solving difficult problems with
effective solutions.
– Understanding of public presentation, in
particular as a proficient public speaker.
Current external appointments:
– Non-Executive Director at Arbuthnot Latham
& Co.
– Non-Executive Director at Encore Capital
Group, Inc.
– Chair at Pool Reinsurance Company Limited.
* Biographies show Committee membership at the point the Committee was stood down at the end of 2023.
Vanquis Banking Group plc Annual Report and Accounts 2023
56
Governance
Board of Directors continued
Graham Lindsay
Independent
Non-Executive Director
C*
N
Re
Appointed: 1 April 2019
Tenure: 4 years
Career and experience:
Graham has held a number of senior executive
roles, including responsibility for the Lloyds
branch network and as Corporate Responsibility
Director. Graham joined the Wonga UK board
in 2016 as part of the new leadership team
engaged to improve the business and deliver
change. Graham sat on the board of the
Institute of Banking & Financial Services and on
the Professional Standards Board. He is Senior
Independent Director at One Family, a mutual
life assurance business.
Graham’s contribution to the Board, key
strengths, skills and reasons for re-election:
Graham brings to the Board extensive
experience in commercial and retail banking
following a 40-year career at Lloyds Banking
Group and a deep understanding across
all distribution channels. Graham has had
demonstrable success in focusing organisations
on their customers, ensuring they are at the
heart of decision making and product design.
Graham also has a strong appreciation of the
Group’s regulatory environment.
– Extensive customer knowledge, strong
customer focus and a track record of
enabling and overseeing businesses
to ensure that they put the customer
at the heart of what they do.
– Significant stakeholder
engagement experience.
Current external appointments:
– Senior Independent Director at OneFamily.
– Chair of the Remuneration Committee and
the Pension Trustee Board.
– Emeritus Trustee of The Brain Tumour Charity.
Margot James
Independent
Non-Executive Director
C*
N
Re
Appointed: 27 July 2020 (to stand down on
15 May 2024)
Tenure: 3 years
Career and experience:
Margot served as a Member of Parliament
between 2010 and 2019 and has held a number
of ministerial offices, latterly as Minister of State
for the Department of Digital, Culture, Media &
Sport, where she championed the interests of
both industry and consumers in the digital world.
In her role as Parliamentary Under-Secretary
of State at the Department for Business, Energy
& Industrial Strategy, Margot had responsibility
for small businesses, consumers and corporate
governance, including labour markets and the
retail sector.
Margot’s contribution to the Board, key
strengths, skills:
Margot has a wide-ranging successful career
in both the public and private sectors. Her
public sector experience provides Margot with
a strong understanding of the expectations of
regulators and other public stakeholders, as well
as strong knowledge of corporate governance,
labour markets and the UK’s technology and
retail sectors. She has a track record of driving
value for shareholders and has a demonstrable
record as a successful entrepreneur and CEO.
– Experienced Government Minister and
Member of Parliament.
– Results-focused entrepreneurial
business owner.
– Strong track record as a CEO and
business leader.
– Non-executive director and chair experience.
– Deep governance knowledge.
– Strong relationships with wider stakeholders
in a variety of sectors.
Current external appointments:
– Executive Chair WMG at the University
of Warwick.
– Emeritus Governor of the London School
of Economics.
– Non-Executive Chair at Taso Advisory.
Michele Greene
Independent
Non-Executive Director
C*
N
Ri
Appointed: 9 March 2023
Tenure: 1 year
Career and experience:
Michele is a highly experienced finance
professional at executive and board level. She
has held senior roles at Virgin Money and MBNA
Europe Bank and, prior to that, she worked
across various finance functions at Goldman
Sachs, Credit Lyonnais and KPMG Dublin. At
Virgin Money, Michele was Director of Strategic
Development, where she was responsible
for establishing a credit card business on a
newly built IT platform and was subsequently
appointed as the Managing Director of the
Virgin Money Digital Bank. Prior to that she was
the Chief Financial Officer of MBNA Europe
Bank between 2005 and 2013. In 2018 Michele
co-founded Mololo Limited, a boutique advisory
company specialising in helping companies in
the payments and unsecured lending space.
Michele’s contribution to the Board, key
strengths, skills and reasons for re-election:
Michele has over 25 years’ experience of
financial services and retail banking, particularly
in the areas of payments and digital innovation.
Michele has built significant experience in the
development and growth of successful banking
businesses.
– Extensive experience of financial services
and retail banking, particularly in the areas
of payments and digital innovation.
– Chartered Accountant and experienced
business executive and finance professional
with a strong track record as a CFO and MD.
– Deep knowledge within the consumer credit,
card payments and digital banking sector.
– Proven ability to build effective working
relationships with key stakeholders, including
regulators, investors and analysts.
– Non-executive director and chair experience.
Current external appointments:
– Executive Director and co-founder of
Mololo Limited.
– Non-Executive Director of Bank of Ireland
Group plc.
– Non-Executive Director with J&E Davy
Unlimited.
– Non-Executive Director of East End Fair
Finance Limited.
Vanquis Banking Group plc Annual Report and Accounts 2023
57
Governance Financial statementsStrategic Report Shareholder information
The Board is the principal decision-making body of the Group and is committed to promoting the
long-term success for the Group whilst maintaining a high standard of corporate governance.
Setting our strategy
In October 2023 the Group announced the initiation of a full
review of its strategy and its strategic ambition to become
the outstanding customer champion in our target market
segment. Following review and approval by the Board, the
Group’s strategy and strategic drivers were reset, as detailed
on pages 9, 57 and 58. The Board reviewed and discussed
the Group’s strategic refresh across a number of meetings,
including the outcome of a bottom-up assessment of the
Group’s customer and customer segmentation strategy, and
approved the strategy in March 2024. The Board will continue
to work closely with the Executive team to provide guidance,
support and oversight as the strategy is implemented. On
pages 59 and 60 you can see a review of the Boards activities
during the year and how these link to the Group’s strategy
and on pages 41, 58, 60, 65 and 74, we report on some of the
key strategic decisions made by the Board during the year,
including the strategy refresh as set out below. The Group
recognises the importance of fostering an inclusive culture to
execute our strategy in a sustainable manner. Reflecting this,
management sought to make the strategy setting as inclusive
as possible, with colleague representatives from across the
Group attending delivery committee meetings and over 160
colleague volunteers contributing to the workshops. Further
details on the alignment of our culture with our strategy are on
pages 9 to 11.
As part of the strategic refresh, it is important to ensure our
Purpose continues to clearly align with the changes to our
strategy, in order to guide our decision-making. To support
this, a review of our Purpose was undertaken alongside
the review of our strategy, which you can read more about
on page 58.
Effective governance supporting delivery
of strategic aims
The Board is responsible for approving the Group’s strategy,
as detailed in the Matters Reserved for the Board, and for
reviewing its implementation.
In carrying out their roles, the Board has established
committees who each have their own roles to support the
delivery of our strategy. The role, remit and activities of each
of the committees of the Board are summarised in the
committee reports on pages 73 to 86.
With this in mind and responding to the Board’s own
effectiveness evaluation and with a view to heightening the
Board’s focus and attention on our customers, the Board has
decided to cease the CCE Committee in 2024 and embed
most of its Customer-related responsibilities into the Board
thus , enabling the Board to directly oversee all customer
aspects of the implementation of the strategy. In support
of good governance we have a Group Delegated Authorities
Manual which clearly indicates which forum key strategic
decisions can be made and is available to all colleagues
on our intranet. We have formally documented the division
of responsibilities between our Chairman and CEO supporting
both to execute their responsibilities regarding the design,
execution and oversight of the strategy.
Examining performance and implementation
Strategic KPIs are regularly reported to the Board, through
management reports, to monitor the implementation of our
strategy. The Group CEO and CFO each report to the Board on
the Groups operational and financial performance against
budget and strategy. The Committee Chairs report to the
Board at each meeting on the work of their committee and
escalate any concerns or risks for the Board’s attention. The
CEO and Executive Committee are responsible for developing,
proposing and implementing the Board approved strategy
in line with the Culture, Purpose and Values of the Group.
In doing so, it is responsible for managing the Group’s risks
alongside the Risk Committee where these risks are overseen
in greater detail.
A transformation programme has been established to deliver
the new strategic direction and our customer-centric strategy
will be implemented over the next coming years and will be
delivered by a dedicated central transformation office.
The components of our strategy are supported by our
strategic objectives. To deliver our Purpose, we will serve our
customers with differentiated solutions that meet their needs,
current, emerging and future, across lending, Snoop (money
management insights) and savings; supported by insightful
risk management; operational efficiency and effectiveness
through our exiting platforms supported by technology
enhancements; and people and culture.
Efficient
organisation
3
People
and culture
5
Customer
centricity
1
Insightful risk
management
2
Digital, tech,
data and analytics
4
Vanquis Banking Group plc Annual Report and Accounts 2023
58
Governance
Setting our strategy continued
Principal decision: H2 2023 performance reset plan and strategy review
The Board approved the performance reset programme and oversaw the Group’s strategic review, which sought to establish a customer-
centric strategy for the Group to deliver sustainable returns.
Decision making process
In September 2023 the Board considered a recommendation
to change the Group’s short-term strategy. The Board supported
a performance reset plan (the Reset) which articulated the swift
management actions required to return the Group to a path of
sustainable, profitable growth. The Board also supported a proposal
to initiate a wider strategic review that would seek to redefine the
Group’s medium and long-term strategy and which has been titled
‘North Star’.
To remain agile in the execution of the Reset proposals and considering
the relevant expertise of its members, the Board established a sub-
committee of the Board to oversee and support its implementation.
The Board and sub-committee received detailed reports from the
second line and third line providing assurance over the significant
change and possible risks arising from the simplification of the
operating model and resulting redundancy programme.
In its consideration of the medium and long-term strategy in
December 2023 and January 2024 the Board received updates
on the strategic review, including progress made in relation to our
customer strategy and regarding the 14 other workstreams subject
to the review. The Board discussed the developing customer strategy
and the competitive environment, noting the review sought to refocus
and orientate the Group’s strategy on its customers, as opposed to
being based on its products, in order to deliver a compelling customer
proposition and deliver attractive, sustainable returns for shareholders.
The Board considered how the Group would focus on making customer
journeys as intuitive and accessible as possible and on the Group’s
distribution strategy. The Board also received an update on how
insightful risk management and empowered colleagues would enable
delivery of our customer-focused strategy. Management progressed
to refresh the Purpose and further develop the strategy during the first
quarter of 2024 which was approved by the Board on 26 March 2024.
You can read details of the strategy on page 9.
Long-term consequences
Whilst naturally having a short timeframe for execution, the Reset
plan was considered by the Board as fundamental and critical
to the long-term stability of the Group, contributing to its overall
efficiency and sustainable value creation. The Board oversaw that the
redundancy programme undertaken in 2023 had been completed
sympathetically and compliantly. The work of the Colleague Forums,
at some of which the Designated Non-Executive Colleague Champion
had been present, had been instrumental in delivering this outcome
and a number of colleagues’ counter-proposals had been accepted.
The Board recognised that structuring as a customer-centric
organisation allowed future flexibility from a product and services
perspective and drove efficiency and alignment across the
organisation. The wider strategy review had the longer-term interests
of the Group at its heart, with the purpose of the review being to build
and drive a sustainable, customer obsessed business. The review
of the Group’s Purpose, which has been operated in parallel with
the strategy review, underlined the long-term approach taken.
Balancing stakeholder interests
The Board oversaw management developing the strategy having
sought suitable professional and independent advice and in
collaboration with its stakeholders, corporate brokers, colleagues
and customers. The Board had encouraged the collaboration
with colleagues and was heartened by the participation of more
than 160 colleagues in the workshops and roadshows throughout
the organisation to help define the strategy and refresh the
Group’s Purpose, demonstrating the colleagues’ passion for its
customers and the business. Senior leaders were also significantly
involved in the review of our Purpose. Qualitative and quantitative
customer research had been completed and presented to the
Board to identify the Group’s target customer segments. Delivering
sustainable returns for shareholders is at the heart of the strategic
planning process. The Board noted that management had
maintained proactive dialogue with its regulators and considered
carefully how colleagues were impacted by its Reset plan and the
proposed strategy, and how people and culture were enablers of
the delivery of the new strategy.
Challenges
The Board recognised that there had been a large amount of
change in the Group and that the Reset and customer-centric
strategy required collaboration and support from all stakeholders,
particularly colleagues and shareholders. The Board noted the
actions taken by the refreshed executive management team to
unify and inspire colleagues through an engaging, open and
accountable communication style. The Board also recognised the
efforts to connect with shareholders and that a comprehensive
Strategy Seminar had been arranged for 27 March 2024.
Links to stakeholders Links to strategic themes
21 43 5
Links to risks
Links to s.172
P1
P2
P4
P5
P8
P10
P11
Strategic themes
Find our key risks on
page 44 to 50
P
Links to risks
1
Customer Centricity
2
Insightful Risk Management
3
4
5
Efficient Organisation
Digital, Tech, Data
and Analytics
A great people proposition
Links to s.172Links to stakeholders
Customers
Colleagues
Regulators and
Government
Shareholders
Communities
Suppliers
The need to act fairly as between
members of the Company
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
Vanquis Banking Group plc Annual Report and Accounts 2023
59
Governance Financial statementsStrategic Report Shareholder information
Promoting long-term sustainable success: Board focus areas during 2023
Board meetings follow a carefully considered agenda that is agreed by the Chairman, in conjunction with the CEO and General
Counsel and Company Secretary. Board meetings comprise the matters required to ensure effective performance and
governance of the Group, including operational and financial performance, governance matters and chosen deep dives into
areas of strategic importance. The following pages provide examples of key Board activities during the year.
Strategy
1
2
3
4
5
Links to s.172
Links to
stakeholders
The Board oversaw the review of our strategy and approved the updated strategy in
March 2024. See page 58.
Approved the acquisition of Snoop. See page 41.
Reviewed progress of the Group’s second charge mortgage business and its future
strategy, providing approval to implement the necessary next steps to develop
the business. The Board discussed the risk control environment and processes
implemented for the second charge mortgage business.
Reviewed how the Group was perceived externally and the approach to further
developing the Group’s reputation following its repositioning as a specialist
banking group. The Board discussed its engagement approach with key
external stakeholders.
Budget, financing and performance
1
3
Links to s.172
Links to
stakeholders
Approved the 2024 Budget.
Approved a final ordinary dividend for recommendation to shareholders and the
payment of an interim dividend.
Reviewed and approved changes to the Group’s intra-group funding arrangements
in order to support effective implementation of the Group’s funding strategy.
IT, cyber and resilience
1
2
3
4
5
Links to s.172
Links to
stakeholders
Reviewed the progress of the development and implementation of the Group’s
technology strategy, including benefit realisation, alignment with the Group’s
strategy and customer goals, risk management, areas for enhancement and the
associated people strategy.
Received updates on our technology and change teams and portfolios and how
they supported delivery of the Group’s strategic priorities and objectives. The
Board was updated on the impact of IT system outages, information security and
data strategy.
Reviewed the Group’s operational resilience self-assessment and reviewed the
implementation of the action plan to enhance operational resilience. Reviewed the
Group’s business continuity management arrangements and preparedness.
Governance and risk
2
3
4
Links to s.172
Links to
stakeholders
Approved a retail shareholder engagement programme and a programme to
trace gone-away shareholders and reunite them with their shares and unclaimed
dividends.
Received an investor update, including feedback on investor views and priorities,
and discussed the Group’s investor engagement strategy.
Regularly reviewed the Group’s principal risks and considered the annual
assessment of the effectiveness of our risk and internal control framework.
People and culture
1
2
3
5
Links to s.172
Links to
stakeholders
Oversight of the outsourcing of activities, including consideration of the benefits
case, customer needs and any impact of outsourcing on them and on colleagues.
Reviewed the results of the Colleague Survey and Culture Survey. The Board considered
the themes and insights from the results and discussed the action planning approach
in relation to opportunity areas, including in relation to culture and values.
Received a whistleblowing update, considering whistleblowing activity and
proposed enhancements to the whistleblowing process for 2023 and provided
approval of changes to the Whistleblowing Policy.
Vanquis Banking Group plc Annual Report and Accounts 2023
60
Governance
Promoting long-term sustainable success: Board focus areas during 2023 continued
Customer and regulatory
1
2
4
5
Links to s.172
Links to
stakeholders
Received an update on customer complaint performance and resolution, including
progress on root cause analysis and how this was being used to improve the
customer journey.
Reviewed progress on the Group’s response to the implementation of the FCA’s
Consumer Duty. The Board was updated on what changes had been made to align
with the Consumer Duty and how oversight would be in place to ensure continued
alignment.
As part of its oversight of the review of the Group’s strategy, the Board considered
the Group’s customer strategy. See page 58.
Reviewed progress following the launch of a new vehicle finance personal contract
hire product, including project product performance, key risks and mitigations and
customer outcomes and feedback.
Looking forward to 2024, focus areas are expected to include:
– overseeing the implementation of our strategy, including the development of compelling propositions for all target
customer cohorts;
– enhancing shareholder engagement; and
– considering longer-term industry issues, such as knowing our customers in a digital world.
Principal decision: launch of new savings products
The Board approved the broadening of the range of savings products the Group offered customers to include 90 and 120-day notice
accounts to complement its existing range of one to five-year fixed rate accounts and improve customer choice.
Product governance
As part of our Product Management Framework (PMF), Board
approval is required to approve the launch of new products.
The PMF enables a consistent approach to managing
existing products and developing new products, including
design, delivery and ongoing monitoring.
Decision making process
The Board considered the risks and benefits to both the
Group and to its customers of VBL introducing notice
accounts. It was noted that Notice Accounts support the
diversification of the Group’s product offering, diversifying
the Group away from the competitive environment and
concentration risk of fixed-term deposits. The Board also
considered how Notice Accounts supported the Group’s
funding strategy and formed part of its retail banking
strategy, noting that the Group’s stable and contractual
funding mix created some capacity for behavioural-based
deposits while also reducing some of the refinancing risks
of fixed-term deposits. The risks and benefits case for the
Notice Accounts also considered the impact of introducing
the products on the Group’s liquidity.
The Board reviewed the benefit to customers of Notice
Account products in the context of the customer saving
needs identified by the FCA in its research, which would
provide customers with more choice and enable the
Group to attract and meet the saving needs of more
customers, so increasing the pool of available funds
to the Group, but that required prudent management
for the risk of unexpected outflows. The Notice Account
proposal presented to the Board set out how the product
was aligned with the Consumer Duty and included a fair
value assessment. The Board considered how the product
would be operated in conjunction with an external service
provider and discussed and challenged management
on the required capabilities of that supplier to ensure
customers could be provided with the necessary service
levels. The Board also noted the capabilities and process
changes required for colleagues to introduce the
new product.
The Board was provided an assessment of the risks
associated with the launch of the Notice Account products,
including funding, liquidity, market, legal and operational
risk. Risk parameters were agreed as appropriate to
the product.
Approval
Following due consideration, the Board approved the
introduction of a 90-day and 120-day Notice Account into
the VBL savings product portfolio.
Links to stakeholders Links to strategic themes
1
2
Links to risks
P1
P2
P4
P5
P11
Links to s.172
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61
Governance Financial statementsStrategic Report Shareholder information
Refreshing our business values to underpin
the culture we want to create –
The Vanquis Way
We know that culture is an important strategic differentiator
and fundamental to our success to deliver our Purpose,
mission and strategic priorities.
As reported on page 9, our strategy review has led us to
review and re-articulate our Group Purpose: ‘to deliver
caring banking so our customers can make the most of life’s
opportunities.’ The Board has overseen the review of our
strategy and reviewed and agreed the re-articulation of the
Group’s Purpose.
During the year we also launched The Vanquis Way,
recognising that a big part of coming together as Vanquis
Banking Group and evolving the way we do things was the
need to establish collective cultural standards and agree
expectations for this new phase of our journey. The Vanquis
Way articulates how we come together to achieve long-term
success and make our business a great place to work and
you can read more about this on pages 61 and 62. As reported
on page 62, during the year a Culture Survey was undertaken
to help us understand where we were getting it right with
fostering our desired culture and where we need to do better.
As the Board committee is responsible for overseeing our
culture, the CCE Committee reviewed the results of this survey,
as set out on pages 61 and 62.
1
Leading by example
The Board and its members play a key role in supporting
the embedding of the desired culture through leading by
example. Our governance framework reflects the key role the
Board plays in culture, with the Board and its committees
each having responsibility for areas where culture can be
monitored, as described further below. This is underpinned
by an appropriate flow of information, enabling the Board
and its committees to oversee management and challenge
performance, culture and strategy. Our Board understands
that a strong culture, supported by good governance, enables
long-term growth and generates sustainable value for our
stakeholders. You can also read about how the Board has
had regard to the interests of our stakeholders and their
s.172 responsibilities to deliver long-term growth on pages
40 and 41.
We have a Designated Non-Executive Colleague Champion,
who is also the Consumer Duty Champion. This is a key role
in facilitating the Board’s oversight of our customer-focused
culture. The Board recognises the importance of colleague
feedback to embedding our culture and taking action when
needed. Our Designated Non-Executive Colleague Champion
attends Colleague Forum meetings and undertakes other
colleague engagement, feeding back colleague views in
order to shape Board discussion and consideration. You
can read more about this on page 67. Feedback is collated
through various other mechanisms such as the Colleague and
Pulse Surveys, Colleague Forums, policies and whistleblowing
tools, the output of which is reported through various Board
committees. This year we have seen a shift in the role that the
Colleague Forum Chairperson plays, taking a more active role
in leading the agenda and driving the actions. We have also
seen more guest speakers including Board directors invited to
the sessions to enhance exposure of the Colleague Forum.
The Board: our culture
Feedback taken from last year has ensured that this year
there has been earlier engagement with the Colleague Forum
to utilise its views and feedback as we continue to focus on
building our culture. We saw this come to life through the
development of The Vanquis Way and the launch earlier this
year where the Colleague Forum representatives played an
important role together with other members of the Executive
Committee to shape The Vanquis Way.
Our inclusion and diversity ambition remains to build and
sustain an inclusive culture and diverse workforce which
will help us to respond to the needs of our diverse customer
base and support our Purpose, to deliver caring banking
so our customers can make the most of life’s opportunities.
During the year, we improved our ability to benchmark our
I&D performance, and we have become members of LGBT
Great and Investing in Ethnicity. Our Nomination Committee
oversees our performance in relation to diversity and
inclusion, and further details can be found on pages 73 to
75. Our non-executive directors play an important role in
supporting our diversity ambitions, including attending key
internal events as set out below.
2
Embedding our culture
Since joining the Group, Sir Peter Estlin has visited all Vanquis
office locations, and has met informally with many of our
colleagues. Michele Greene joined Peter for his visit to
Petersfield in July where they met the senior leadership team.
Peter visited both Bradford and Chatham offices in August,
where he and the Chief Operations Officer hosted a town hall
at which colleagues were encouraged to share key priorities
within their functions. Peter plans to make regular visits to
Petersfield and Chatham in the future.
Margot James also attended several of our inclusion and
wellbeing calls and events, playing an active part to support
our inclusion and diversity agenda. On International Women’s
Day, Margot was part of a panel of speakers who shared their
own experiences to celebrate all the different types of women
we have in VBG, and to highlight the theme of 2023, Embrace
Equity. More recently, Margot attended a call on financial
wellbeing and during Black History Month, a time to talk
session, where the CEO and Founder of Investing in Ethnicity
joined us to share her experiences with colleagues.
As noted above, Graham Lindsay, our Designated Non-
Executive Colleague Champion, has continued to attend
regular Colleague Forum sessions during this year. Paul
Hewitt, Chair of the Audit Committee, and Margot James,
have also attended Colleague Forum meetings to receive
direct colleague feedback and engagement. At each event,
time has been given on the agenda for our Board members
to introduce themselves and also for there to be a good two-
way conversation and sharing of views on different colleague
matters. This has been well received by colleagues.
Vanquis Banking Group plc Annual Report and Accounts 2023
62
Governance
Refreshing our business values to underpin
the culture we want to create –
The Vanquis Way continued
3
Assessing and monitoring our culture
In addition to the colleague engagement reported above,
the Board and its committees monitor the alignment of the
Group’s culture with our Purpose, values and strategy, through
a variety of mechanisms, cultural indicators and reporting
lines including those summarised below:
– feedback via the Colleague Forum and Designated Non-
Executive Colleague and Customer Champion;
– feedback on our colleague and cultural surveys;
– monitoring our Conduct Dashboard;
– monitoring whistleblowing cases;
– risk adjustment assessment of remuneration outcomes;
– monitoring of our control environment, including internal
and external audit actions;
– our risk framework and risk culture are overseen by the Risk
Committee; and
– gender pay gap disclosures.
You can read more about our colleague engagement initiatives
on page 63 and find the results of our surveys on page 16.
Actions are identified based on the lowest scored questions
and tracked by the Board in order to improve engagement
and make the Group a healthier place to work. You can also
read more about the work undertaken by our Nomination
Committee around I&D activities on pages 75 to 77.
The results of the culture survey carried in May 2023, the first
carried out by the Group, showed that 67% of colleagues
agreed “We cared about people”; 66% felt “We pull together
as a team” and 63% felt “We get the right things done. 180
colleagues across the business met with Executive Committee
members at our four offices to explore insights from the
culture survey and discuss how we can collectively live The
Vanquis Way. The roadshows proved highly valuable as they
allowed Executive Committee members to demonstrate their
commitment to The Vanquis Way and engage directly with
colleagues at all levels. A full colleague survey was carried out
in December 2023, the results of which reflected the extent of
changes in the Group in the fourth quarter, which you can read
about on pages 12 and 16. Roadshow feedback and insights
from local team culture sessions will inform our ongoing
culture campaign.
4
Aligning culture and incentives
Our Reward Framework and incentives play a key role in
driving the desired behaviours and culture. We invest in our
colleagues through recognition, reward, development and
wellbeing. Colleagues are recognised through our ‘Better
Everyday’ recognition platform and our ‘Perks at Work’ scheme,
which offers colleagues in-store and online rewards and
discounts, online training courses and mental wellbeing courses.
In May, we launched ‘Way to Go!’ which is our new and refreshed
Group-wide recognition approach that will help us celebrate
and thank colleagues who are living and demonstrating our new
values. This has landed very positively, and we had more than
250 recognition awards sent in the first two weeks. In July 2023
we introduced our new performance management behaviours
which are aligned to The Vanquis Way. The Remuneration
Committee reviews workforce remuneration policies and
practices and assesses their alignment with the culture and
strategy of the Company. Gender pay gap disclosures are also
considered annually to ensure practices are consistent with the
Company’s values. Further work of the Remuneration Committee
can be found on pages 93 to 95.
During the year, our Designated Non-Executive Colleague
Champion, together with our Reward team, engaged the
Colleague Forum on our Reward Framework and how executive
director remuneration aligns with the wider colleague population.
The conclusion of this engagement was that executive
remuneration aligns with the wider Company pay policy and
there were no anomalies specific to the executive directors.
5
Colleague wellbeing
We recognise the importance of promoting a positive culture of
mental health and wellbeing, where all colleagues, regardless
of their backgrounds and experiences, feel respected and
supported. We believe that everyone can contribute to their own
mental health and wellbeing, as well as support others in taking
care of their wellbeing. To achieve this, all colleagues and their
families have access to a confidential Employee Assistance
Programme (EAP) provided by Health Assured. This 24/7 service
offers compassionate support to our colleagues, helping them
navigate any challenges they may face at home or at work.
Additionally, we collaborate with the Bank Workers Charity to
deliver a series of webinars throughout the year that explore
wellbeing and inclusion topics. These webinars aim to raise
awareness and empathy, providing guidance and advice,
and signposting for further support. We encourage colleagues
to utilise the Wellbeing Risk Assessments and Wellness
Action Plans to proactively manage their wellbeing. We also
encourage them to work with their managers to ensure they
have the necessary support and adjustments in the workplace.
Furthermore, colleagues have access to Mental Health First
Aiders. We are proud members of Hospice UK’s Compassionate
Employers programme which aims to provide support to
colleagues during times of grief, dying and caregiving. For more
information, please see our ESG Report on pages 14 to 31.
We understand that the process of leaving the business due
to redundancy can be challenging and stressful. To support
colleagues during this transition when colleagues left the
business during 2023, we provided access to a professional
outplacement service with support from a personal career
coach. Internal workshops were arranged to support with
essential skills such as CV writing and interviewing techniques.
Additionally, we offered wellbeing support to help colleagues
build resilience and navigate uncertainty.
The Board: our culture continued
Vanquis Banking Group plc Annual Report and Accounts 2023
63
Governance Financial statementsStrategic Report Shareholder information
Our customers are central to our Purpose. For more
information about who our customers are and the
products we provide, please refer to pages 10 and 11.
What are their interests and our areas of focus?
– Access to suitable and affordable financial products that
meet their needs.
– Reliable and high-quality service.
– Financial education, budgeting tools and value for money.
– Building trusted financial relationships to help them manage
through significant life events and mental or physical
health challenges.
Board and Company engagement
– Board has overseen the development of the Group’s strategy
which has been based on direct and indirect customer
research providing both qualitative and quantitative insights.
– Board Risk Committee and CCE Committee have overseen
the implementation of the FCA’s Consumer Duty regulations
including management’s plans to ensure good customer
outcomes.
– CCE Committee has monitored customer KPIs (see pages
12 and 13) and has listened to customer calls to review the
quality and outcome of customer service.
– Board has received enhanced management reports
to understand the impact of the cost-of-living crisis on
our customers.
– Customer discovery research conducted in August 2023 has
been used to receive feedback from customers including
testing prototype blueprint customer journeys.
Outcomes and impact on decision making
– Acquisition of Snoop to provide pathway towards digital
integration of deal finding features for customers.
– Zest partnership launched to provide access to electric
vehicles for Moneybarn customers.
– Continued development of digital features including the
launch of Apple Pay and View PIN.
– Regular customer obsession webinars held for all colleagues
to deepen customer knowledge throughout the business.
– Customer Hub for colleagues on the intranet.
– Consumer Duty review of all customer communications
and terms and conditions and a Customer Outcomes
Dashboard created.
We greatly value our colleagues who are essential to
the success of our business. Please see page 16 for more
information.
What are their interests and our areas of focus?
– Career development, remuneration and benefits.
– Company culture, wellbeing, inclusion and diversity, work-
life balance.
– Tools and resources and supporting our customers.
Board and Company engagement
– CEO records and publishes a weekly video blog (vlog) focused
on answering colleague questions.
– Chairman and CEO recorded a vlog for colleagues shortly
after the Chairman joined the business and have visited all
office locations in person to meet directly with colleagues.
– Monthly live ‘Stay Connected’ webinars have been well attended
by colleagues with business performance updates and real time
question and answer sessions with the CEO and broader ExCo.
Recordings and transcripts of these events are made available
for those colleagues unable to attend.
– All colleagues were invited to attend sessions regarding The
Vanquis Way with more than 180 colleagues attending.
– All colleagues were invited to attend sessions regarding the
strategy with more than 160 colleagues participating.
– Graham Lindsay, the Designated Non-Executive Colleague
Champion, has visited offices and attended regular
Colleague Forums and reported verbally to the Board.
– Colleague Forums meet regularly to discuss key topics and
feed back to senior management and the Board.
– Two colleague surveys have been issued during the year: a
culture survey and a Great Place to Work survey to gather
valuable colleague insights (see page 16).
Outcomes and impact on decision making
– Colleague survey results fed back to the Board, action plans
developed and focus sessions held (see page 79).
– Colleague insights and voice have been factored into the
Group’s strategy.
– Colleague feedback from The Vanquis Way culture sessions was
built into the management and colleague guides available on
the Group’s intranet.
– Colleague Forum was active during the collective consultation
on the Group’s restructure and a number of colleagues’ counter-
proposals were accepted.
– Colleague development centre launched on the intranet with
tools for career
planning, skill development, apprenticeships
and mentoring.
Customers Colleagues
Stakeholder engagement and decision making
Meaningful and effective stakeholder communication is critical to ensure the
long-term success of the Group.
We have a stakeholder engagement strategy that underpins effective stakeholder communication and supports the Board to
ensure the methods and mechanisms of engagement are appropriate and generate balanced decisions. Each year we review
and re-confirm who our stakeholders are and we prioritise our stakeholder engagement objectives accordingly.
Our S.172 Statement, which describes the impact of stakeholder engagement on the Board’s decision making, can be found on
pages 40 and 41 and has been incorporated throughout our Strategic and Governance Reports. You can read more about our
Purpose, and the evolution of our mission and strategy in the Strategic Report.
Links to strategic themes
1
2
3
4
5
Links to s.172
Links to strategic themes
3
4
5
Links to s.172
Effective stakeholder communication
Vanquis Banking Group plc Annual Report and Accounts 2023
64
Governance
We are committed to managing our impact on the
environment and understanding and assessing the
risks associated with climate change. Our climate risk
disclosures are consistent with the recommended
disclosures of the Task Force on Climate-related
Financial Disclosures (TCFD) and meet the requirements
of the Climate-related Financial Disclosure Regulations
2022. Please see pages 19 to 28 for more information.
What are their interests and our areas of focus?
– Sustainable business practices, supporting initiatives to manage
climate change risks and opportunities and climate-related targets.
Board and Company engagement
– Board and Audit Committee approved the Group’s TCFD
content in the Annual Report and Accounts.
– Setting of climate risk key risk indicators and performance
against them is overseen by the Risk Committee.
– E-learning module was rolled out to all colleagues on the
Group’s climate risk.
– Climate risk content and performance information included in
the Group’s ICAAP.
– CCE approved the submission of the science-based targets
to the Science Based Targets initiative (SBTi).
Outcomes and impact on decision making
– Continued certification of the Group’s environmental
management system to ISO 14001.
– Climate risk management and reporting that are consistent
with UK regulatory requirements.
– The continued development of the Group’s carbon approach
moving from carbon offsetting to carbon capture.
– Named by the Financial Times in its 2023 Europe Climate
Leaders index.
– Submitted two science-based targets to the SBTi which were
approved on 30 January 2024.
We want to do the best we can for our customers and
stakeholders. Our strategy, Purpose and values promote
a conduct focused risk culture and we are committed to
maintaining an open and honest relationship with our
regulators. Please see page 47 for more information.
What are their interests and our areas of focus?
– Conduct, compliance and fair treatment of stakeholders.
Board and Company engagement
– Regulatory engagement to introduce the CEO, CFO and
Chairman who all joined during the year.
– Ongoing regular engagement meetings have been held with
the CRO, CFO and CEO and the Group’s regulators, including
about capital management.
– Key regulatory interactions, insights and areas of regulatory
focus are reported to the Board via the Chief Risk Officer Report.
– Risk Committee has scrutinised and recommended to the
Board the 2023 ILAAP and ICAAP for approval (see page 84).
– Membership of the UK Finance and Leasing Association and
National Numeracy Leadership Council.
Outcomes and impact on decision making
– Regulatory approval granted for the Group’s Chairman,
CEO and CFO.
– In March, following the PRA’s Capital Supervisory Review
and Evaluation Process (C-SREP) the Group’s Total Capital
Requirement was reduced.
Environment Regulators and Government
Links to strategic themes
2
3
4
5
Links to s.172
Links to strategic themes
2
3
5
Links to s.172
Investing and rewarding our workforce
This year we launched The Vanquis Way, our cultural change plan that we believe will help us best support our colleagues
to serve our customers and achieve our strategic objectives. The Vanquis Way is defined by four clear values that our
colleagues can connect with and incorporate into their work every day. We have updated our performance management
framework to support colleagues’ set objectives that align to The Vanquis Way values and assess ‘what’ and ‘how’ they have
achieved them. Our colleagues have access our comprehensive Development Centre which has free access to tools and
resources to help them with career planning, skills development, apprenticeships, work experience and our management
programmes. You can read more about the ways in which we invest in and reward our workforce on page 90.
Stakeholder engagement and decision making continued
Vanquis Banking Group plc Annual Report and Accounts 2023
65
Governance Financial statementsStrategic Report Shareholder information
Communities
We are committed to aiding financial inclusion and
support social mobility in the communities we serve.
To read more about our Foundation please see
www.vanquisbankinggroup.com/our-foundation.
What are their interests and our areas of focus?
– Financial education, social mobility and inclusion and addressing
the root causes of social or financial exclusion.
Board and Company engagement
– Board received updates on the investment made in the Group’s
community initiatives (see page 79).
– CCE received updates on community engagement objectives.
– Colleague paid volunteering time is supported for one day per year
and a range of opportunities to volunteer are provided for colleagues.
Outcomes and impact on decision making
– Partnered with Plain Numbers during the year in addition to
continued partnership with National Numeracy.
– School Uniform Project to provide uniforms to those in need via
School-Home Support and the Dixons Academies Trust.
– £1.4m has been invested in our community support programmes.
– Official delivery partner for Bradford UK City of Culture 2025.
– Introduced team community challenges to our London and
Petersfield offices which saw 64 colleagues supporting three
community organisations with much-needed resource.
– Team community challenges across the business have increased
with 256 colleagues giving 1,696 hours of paid volunteering time.
Communities
Principal decision: Outsourcing operations to deliver efficient and effective services for our customers
The Board approved the transition of part of the Group’s operations to two outsourced partners based in South Africa.
Decision making process
A review of the efficiency and effectiveness of the Group’s operations
was undertaken by the Group’s Chief Operating Officer (COO). The
COO recommended that the Group expand its operations with two
of its existing strategic outsourced partners to deliver a cost saving
of over £3m per annum whilst maintaining high levels of customer
care and regulatory compliance. The Board considered the initial
proposal to transfer approximately 360 colleagues by TUPE, upon
which it provided feedback and direction to management, followed
by a full and final proposal and associated supplier contracts which
it approved in May 2023. The Board, its Risk Committee and its CCE
Committee have received subsequent updates on the progress of
the execution of the outsourcing programme following its approval,
including the impact on colleagues and quality and continuity of
service for customers.
Strategy and Purpose
The Board considered that the proposal, which delivered cost savings,
also provided an opportunity to restructure the UK Operations teams
to further enhance the service delivered to customers. By filtering
low complexity queries and collections to outsourced partners the
Group had the opportunity to create highly skilled roles in the UK that
supported vulnerable and sensitive customers and their complex
needs and provided development opportunities to colleagues in
Operations in the UK.
The Board noted that, where comparison was available, the
outsourced providers’ customer satisfaction scores were consistent
with the UK and operations were to be run parallel for a set period of
time to provide continuity and an opportunity to develop skill levels.
Furthermore, the Group’s values would be embedded into training
plans by the outsourced providers in order to maintain the Group’s
customer-centric focus.
Challenges
The Board recognised the people risk for those impacted colleagues
in Operations and more widely the impact on morale of uncertainty
for all colleagues across the Group. There was potential for
reputation risk which was addressed through development of a clear
communications plan and by ensuring fair treatment of colleagues.
The Board noted that management had developed a sophisticated
communications plan for colleagues and had engaged the
Colleague Forum to ensure colleague voices and concerns were
being heard and escalated appropriately. The Board oversaw that
management had provided support to colleagues which was
easily accessible through the Company’s intranet and included the
Employee Assistance Programme. The Group had also engaged
with local employers which had active vacancies on behalf of those
colleagues at risk.
In response to there being a risk of disruption to customer service
quality and responsiveness the Board received assurance from
management that plans were in place for an orderly transition
including running services in parallel for a set period to help
maintain customer service quality. Enhanced monitoring of
customer satisfaction and service KPIs was performed.
The Board noted that both outsourced partners had regulatory
approval and were already classified as material outsourcing
partners for the Group under SYSC 8. Furthermore, the outsourced
partners had undergone comprehensive due diligence that had
covered the requirements of the Modern Slavery Act. The Board
oversaw that remuneration for those employed by the outsourced
partners was above the Real Living Wage and both the CEO and
COO visited the office locations in South Africa to meet with senior
management and employees who would be working for the Group.
Balancing stakeholder interests
The Board acknowledged the decision as complex from a
stakeholder perspective. In giving consideration to the long-
term success of the business the Board recognised as positive
for stakeholders as a whole the careful and proportionate
management of the cost of the Group’s operations. The Board
carefully considered the impact on colleagues arising from the
decision. Redundancies, whilst regrettable, were balanced by the
improvements in efficiency and effectiveness and the creation of
highly skilled roles in Operations in the UK.
The Board appreciated that to manage risks to customers
appropriately management had structured its recommendation
accordingly with customers’ needs in mind and had made suitable
arrangements to support them.
The Board noted the open and considerate style of engagement
with its regulators, which had been informed of the proposal and
recognised that customer data would remain hosted in the UK
under the UK GDPR regulation.
Links to strategic themes
1
2
3
5
Links to s.172
Links to strategic themes
1
4
5
Links to s.172
Vanquis Banking Group plc Annual Report and Accounts 2023
66
Governance
Our shareholders provide capital that enables growth
and for the Group to deliver our Purpose and invest for
future success. Please see page 67 for more information.
What are their interests and our areas of focus?
– Sustainable growth, return on investment, and social and
environmental impact.
Board and Company engagement
– Our AGM was held on 25 May 2023 at which investors were
invited to be present and free to ask questions directly, in
addition to casting votes on the resolutions.
– Chairman, CEO, CFO and Interim Head of Investor Relations
have written to and met with investors and analysts and
reported back to the Board.
– Trading updates were provided via the London Stock
Exchange on the Group’s performance and strategy and
followed by roadshows with investors.
– Feedback from our corporate brokers was distributed to the
Board and senior management after updates were made to
the market.
Outcomes and impact on decision making
– The Q3 trading update on 17 October 2023 updated the market
on financial performance and key initiatives, and included a
profit forecast for FY23 to align market expectations with ours.
– A strategy seminar day was announced for 27 March 2024.
– We received votes representing approximately 84% of our
issued share capital at our 2023 AGM.
Suppliers support us to deliver quality services to our
stakeholders. We are committed to developing strong
relationships with our suppliers that are supported by
robust procurement policies.
What are their interests and our areas of focus?
– Sustainable business, contract performance, customer
service, risk management, prompt payment and commitment
to tackling climate change.
Board and Company engagement
– CEO and COO visited two of the Group’s outsourced providers
in South Africa. Please see the principal decision on page 65
for more information.
– Board approved the broadening and extension of contracts
with the two major outsourced partners.
– Board reviewed and approved the Group’s corporate
procurement policy and the 2023 Modern Slavery Statement.
– Procurement created a Third-Party Risk Management Policy
and Framework.
– CCE Committee noted feedback from the 80 suppliers which
had responded to a questionnaire issued to 320 suppliers.
Outcomes and impact on decision making
– Suppliers responding to the questionnaire indicated that the
Group was performing well in the majority of areas.
– Consistent engagement delivered through application of the
Group’s Supplier Relationship Management Framework.
– Our standard payment terms align to the Prompt Payment
Code (30 days).
– Increased director-level direct engagement with our most
critical suppliers.
Links to strategic themes
1
2
3
4
5
Links to s.172
Links to strategic themes
3
4
5
Links to s.172
Suppliers Shareholders
Stakeholder engagement and decision making continued
Listen
Executive Committee held
roadshows regarding the Group’s
culture and values.
Learn
Colleague feedback identified
eight key areas for the Group to
focus on to make the ideal culture
a reality.
Listen
Direct customer research
undertaken as part of the
strategy review.
Learn
Customer priorities and their focus
were tested in four key areas: on-
boarding, everyday interactions,
support and account closure/
future life goals.
Respond
Copy changes were made to
customer SMS, emails, and
FAQs and IVR instructions were
made clearer. An introduction to
financial management tools was
provided through the Snoop app.
Listen
The CEO engaged with investors
directly following the negative
market reaction to the Group’s first
half results on 28 July 2023.
Learn
Investor feedback showed that
analyst earnings estimates had
differed substantially from the
Group’s results and investors
were confused about the Group’s
strategy and prospects.
Respond
The Vanquis Way launched in April
2023 accompanied by the Way
to Go recognition mechanism.
New performance management
behaviours were introduced in July
2023 aligned to The Vanquis Way.
Respond
The Group’s Q3 trading statement
on 17 October 2023 provided the
market with additional information
including a full-year profit forecast
for 2023 and trend information
to model 2024. The Group also
announced a strategy seminar
day for 27 March 2024.
Vanquis Banking Group plc Annual Report and Accounts 2023
67
Governance Financial statementsStrategic Report Shareholder information
What and who? The role of Designated Non-Executive
Colleague Champion is responsible for engaging with our
colleagues on behalf of the Board and representing their voice
in the Board’s decision making. I am a member of the Group
Board, Chair of the Remuneration Committee and passionate
about people, colleagues and customers.
When and where? I regularly visit our offices and attend the
Colleague Forum both in person and remotely where I listen
and talk to colleagues.
Why and how? I discuss with colleagues the work of the Board
in areas of common interest. I report to the Board verbally
on my colleague engagement work and use the unique
colleague insights I have when providing my input to Board
decisions. Directly engaging with our colleagues promotes
transparency and openness and fosters trusted relationships
between colleagues and the Group’s senior leadership team.
2023 highlights
I am continually impressed by how our colleagues work
together to support each other through difficult times and
the Colleague Forum was exceptional this year in supporting
colleagues impacted as part of the reorganisation with a
number of colleague counter-proposals being accepted and
very comprehensive communications and support services
being put in place.
I am encouraged by the high numbers of colleagues
who have volunteered and participated in the Group’s
strategy work and the important cultural conversations that
established The Vanquis Way values. The enthusiasm that
our colleagues have for our customers and for each other
is profound.
This has been the second year I have discussed with
colleagues the alignment of executive remuneration
with wider colleague remuneration, which has been well
received. An open conversation was had about all elements
of executive reward and I intend to hold another session,
supported by the Head of Reward, at the mid-year point.
Priorities for 2024
I look forward to seeing the input of so many of our colleagues
come to life in the strategy – a true collaborative effort. I am
heartened that the efforts of the Customer, Culture and Ethics
Committee have paid off and we are now in a positive position
to combine its duties and responsibilities back into the Board,
and Remuneration, Nomination and Risk Committees. I will
keep a keen eye out for the reports from our Chief People
Officer regarding the Group’s culture and colleague survey.
I shall continue to meet regularly with our colleagues through
the Colleague Forum and through regular site visits as
I believe this direct engagement is essential to perform the
role of Designated Non-Executive Colleague Champion.
Effective engagement with shareholders and stakeholders: investor relations
Investor relations
This has been a difficult year for the Group’s relationships
with its shareholders. The publication of the Group’s interim
results on 28 July 2023 caused a 29% on the day fall in the
Company’s share price. Furthermore, personnel in key roles
with responsibility for regular shareholder engagement –
the Chairman, Chief Executive, Chief Financial Officer and
Head of Investor Relations – have all changed.
Starting immediately after the interim results, the new Chief
Executive met with key shareholders to understand their
positions. Channels of communication remained open with
ad hoc meetings, introductory letters from the new Chairman
and a formal round of meetings after the Q3 trading update.
Shareholder reaction to the Q3 update characterised it
as a first step towards greater strategic clarity and better
business performance.
Since appointment, the new Chairman and CEO have met with
investors responsible for over two-thirds of our share capital.
Engagement has become more systematic with the seven
sell-side analysts who publish regular research, specifically
the collation of consensus estimates. The Company’s financial
advisor and corporate brokers presented a new shareholder
engagement strategy to the Board in November 2023, which
was reviewed and supported by the Board.
This Annual Report providing our full-year results and our
strategy seminar day to be held on 27 March 2024 will mark
the formal reset of shareholder relations and will be followed
by comprehensive roadshows to meet investors in London,
Edinburgh and New York.
The Board is committed to maintaining effective engagement
and active dialogue with its shareholders. In addition to the
ongoing investor meetings and conferences, the following
methods of engagement and materials are available
to shareholders:
The Annual Report
The Annual Report provides a comprehensive overview of the
Company’s Purpose, strategy and progress against objectives
and is complemented by regular market updates, including
quarterly trading updates.
The Annual General Meeting (AGM)
Shareholders have the opportunity to further engage with and
directly question the Board at the AGM. They are encouraged
to participate in the AGM process and vote on all resolutions
on an individual basis or by proxies. This year our AGM will be
held in London.
The Group website and shareholder correspondence
The Group website provides comprehensive information
about the Company, its divisions and product offerings, and
Board members. Our dedicated ‘Shareholder Hub’ provides
up to date information on our strategy, the latest results
presentations, RNS announcements and our investment case.
Graham Lindsay, Designated
Non-Executive Colleague Champion
Vanquis Banking Group plc Annual Report and Accounts 2023
68
Governance
Division of responsibilities
Our governance framework facilitates effective decision making and is formally documented
in the Group’s Delegated Authorities Manual, Board Governance Manual, Board and Committee
terms of reference, and matters reserved for the Board.
The governance framework is reviewed annually by the Board to ensure it remains effective and fit for purpose. Following
feedback from the 2023 Board effectiveness review (see page 71), the Board decided to dissolve the CCE Committee and
embed its responsibilities under the Board and its other committees.
The Board
The Board is primarily responsible for setting the Group’s strategy for delivering long-term value to our
shareholders and other stakeholders, providing effective challenge to management concerning the
execution of the strategy and ensuring the Group maintains an effective risk management and internal
control system.
Executive directors
The Board delegates the execution of the Company’s strategy and the day-to-day management of the
business to the executive directors, assisted by other members of the Executive Committee.
The Board delegates certain matters to its committees
Our strategy
see page 9
See page 80
for the
Committee’s
role and
responsibilities
See page 84
for the
Committee’s
role and
responsibilities
See page 78
for the
Committee’s
role and
responsibilities
See page 93
for the
Committee’s
role and
responsibilities
See page 73
for the
Committee’s
role and
responsibilities
Managing risks
see page 44
Board composition
see page 70
Section 172(1)
Statement
see page 40
Board activities
see page 59
Audit
Committee
Risk
Committee
CCE
Committee
Remuneration
Committee
Nomination
Committee
Disclosure
Committee
Shareholder and other stakeholders
Governance framework
Independence of the NEDs and conflicts
of interest
The Board and Nomination Committee review the independence
and time commitment of NEDs on appointment and thereafter
annually, taking into consideration the factors in the Code
which might impair independence and any other relevant
circumstances when considering independence, including
their length of service as well as those directors who were
also directors of Vanquis Bank Limited. Time commitment is
also reviewed where an additional external appointment for
a director is proposed. During the year the Board reviewed
and approved the appointment of Elizabeth Chambers to Wise
plc, agreeing that there was no conflict of interest and that
Elizabeth would continue to have sufficient time to carry out
her role on the Board. This year the Nomination Committee
determined that all NEDs continued to demonstrate independence
and all continued to have sufficient time to undertake their
roles effectively. The Board concurred with this conclusion
and recommends all directors for election or re-election by
shareholders at the 2024 AGM, except Elizabeth Chambers
and Margot James as reported on page 53. All directors are
required to disclose to the Board any outside interests which
may pose a conflict with their duty to act in the best interests
of the Group. Further details on conflicts of interest can be
found in the Directors’ Report on page 88.
Independence of the Board
(excluding the Chair) (as at 26 March 2024)
75%
of our Board (excluding the
Chair) are independent
non-executive directors
Independent 75%
Executive 25%
Vanquis Banking Group plc Annual Report and Accounts 2023
69
Governance Financial statementsStrategic Report Shareholder information
Clearly defined roles and responsibilities
There is clear division between executive and non-executive responsibilities to ensure
accountability and oversight.
We define the separate roles and responsibilities of our Chair, CEO and SID in writing and they are available on our website,
www.vanquisbankinggroup.com.
Chair, Sir Peter Estlin
– Leads the Board to deliver strategic objectives and
increase shareholder value.
– Promotes effective decision making, critical
discussion and constructive challenge.
– Safeguards corporate governance.
– Engages with stakeholders to inform Board decision.
Senior Independent Non-Executive Director,
Angela Knight
– Acts as sounding board for the Chair.
– Intermediary for other NEDs to express their views.
– Leads the performance review of the Chairman.
– Available to shareholders outside the normal
communication channels.
Non-executive directors
– Provide independent and constructive challenge.
– Scrutinise the performance of management.
– Develop strategy using their experience and
expertise from other sectors.
– Chair the Remuneration, Nomination, Risk, Audit
and CCE Committees.
General Counsel and Company Secretary,
Melanie Barnett
– Provides legal and governance support to the Board
and executive management.
– Ensures that Board-level information is fit for purpose.
– Facilitates effective discussion between
management and the Board.
– Communicates with shareholders on
governance matters.
Chief Executive Officer, Ian McLaughlin
– Recommends the Group’s strategy and long-term
objectives.
– Leads and manages executive management.
– Manages the day-to-day management of the Group.
– Promotes a healthy culture of accountability
and transparency.
– Ensures that risk management and internal controls
are in place.
Chief Financial Officer, Dave Watts
– Leads the Group Finance function.
– Manages capital management and effective
financial reporting, processes and controls.
– Liaises with investors alongside the CEO.
– Supports the CEO to develop and deliver the
Group’s strategy.
Designated Non-Executive Colleague Champion,
Graham Lindsay
– Seeks to understands the views of colleagues.
– Attends Colleague Forums and other colleague
engagement events.
– Articulates the views of colleagues at Board meetings.
Executive leadership team
– Supports the CEO in developing and
implementing strategy.
– Together with the CEO and CFO, form the
Executive Committee.
– Oversees the day-to-day activities and
performance of the Group.
– Manages the workforce and promotes a healthy culture.
– Implements policies and procedures set by the Board.
Governance
70
Vanquis Banking Group plc Annual Report and Accounts 2023
Composition, succession and evaluation
Board composition (as at 31 December 2023)
Member attendance at Board and committee meetings in 2023
The table below sets out the Board and committee attendance during the year. Attendance is shown as the number of meetings attended
out of the total number of meetings possible for each individual director. Attendance was very strong during the year at both scheduled
and additional meetings. The Board continues to be satisfied that each director is able to allocate sufficient time to the Company. This is
reflected in the very high levels of meeting attendance. The Chair of each committee reports regularly to the Board on how that committee
has discharged its responsibilities. The absences shown below were a result of an urgent personal matter or a pre-arranged commitment.
Board
member Board Ad hoc
Audit
Committee Ad hoc
Nomination
Committee Ad hoc
Remuneration
Committee Ad hoc
Risk
Committee Ad hoc
Customer,
Culture
and Ethics
Committee Ad hoc
Total number
of meetings 9 1 6 1 4 4 4 6 5 1 3 —
Sir Peter Estlin
1
6/6 — 2/2 1/1 3/3 2/3 * 1/1 3/3 — — — —
Ian McLaughlin
2
3/3 — — — — — — — — — — —
Dave Watts
3
2/2 — — — — — — — — — — —
Andrea Blance
8/9 1/1 6/6 1/1 4/4 3/4 4/4 6/6 — — — —
Graham Lindsay 9/9 1/1 — — 4/4 4/4 4/4 6/6 — — 3/3 —
Paul Hewitt
9/9 1/1 6/6 1/1 4/4 4/4 — — 5/5 1/1 — —
Elizabeth
Chambers 9/9 1/1 — — 4/4 4/4 — — 5/5 0/1 3/3 —
Angela Knight
9/9 1/1 6/6 1/1 4/4 4/4 — — 5/5 1/1 — —
Margot James
9/9 1/1 — — 4/4 3/4 4/4 6/6 — — 3/3 —
Michele Greene
4
5/7 — — — 2/3 3/3 — — 3/4 1/1 2/2 —
1 Sir Peter Estlin was appointed on 19 April 2023, *recused due
to being in nomination.
2 Ian McLaughlin was appointed on 1 August 2023.
3 Dave Watts was appointed on 1 November 2023.
4 Michele Greene was appointed on 9 March 2023.
5.
Malcolm Le May (stepped down on 01.08.2023) attended 6/6 Board meetings and
1/1 ad hoc Board meetings during 2023. Neeraj Kapur (stepped down on 07.08.2023)
attended 6/6 Board meetings and 1/1 ad hoc Board meetings during 2023.”
Board gender
diversity
Board ethnic
diversity
Board
tenure
Executive Committee
and direct reports
Male 5
Female 5
White 100% 0-2 years 4
2-5 years 5
5-9 years 1
Male 63%
Female 37%
Board Skills Matrix
This Board Skills Matrix represents the number of directors with core or supplemental
capability in areas that are relevant to the Group’s business model and strategy. A
core capability is one of the strongest areas of a director’s skill and expertise, where
they bring significant value to Board discussions. A supplemental capability is an
area where the director has enough knowledge and experience to carry out their role.
This Board Skills Matrix, together with the biographies on pages 54 to 56, shows the
combined strength of our Board in areas central to delivering the Group’s strategy.
Category
1. Leadership: culture and ethics
2. Strategy
3. Audit and financial reporting
4. Customers
5. Product development
6. Banking
7. UK banking regulation
8. Shareholder engagement
9. Change management
10. Secured loans
11. Cards (near to sub-prime)
12. HR, talent and employee engagement
13. IT and digital initiatives
14. Capital management and treasury
15. Risk management
16. M&A transactions
17. Regulatory landscape
and engagement
18. Cyber crime
19. Environmental impact
Core capability Supplemental capability
9
1
9
2
3
6
4
5
5
1
6
8
7
8
9
9
10
11
1
12
13
14
15
16
17
18
19
6 3
2
2
8
1
6
6 1
5 3
8
7
6
8
6
9
5
6
1
1
1
3
3
2
Vanquis Banking Group plc Annual Report and Accounts 2023
71
Governance Financial statementsStrategic Report Shareholder information
Director induction and training
Director induction process
In 2023 four new directors joined the business, the Chairman, a
non-executive director, the Chief Executive Officer and the Chief
Financial Officer; each director went through a comprehensive
and tailored induction plan which was developed to suit
the requirements of their roles. Our induction programme is
designed to give directors an in-depth understanding of the
business, Purpose, culture and values. The programme includes
meetings with members of the Group Executive Committee and
other key stakeholders, which may include the Group auditor,
external advisors, our brokers, and representatives from the
FCA and PRA.
In November 2023, Dave Watts was appointed as our new Chief
Financial Officer. As part of his induction, Dave was provided with
an induction schedule, which included key reading materials
and a webinar on directors’ duties. Dave was also appointed as
a director to some of the Group’s operating subsidiaries and he
received business-specific induction for these.
All new directors are provided with full access to our secure
electronic reading room within our Board meeting software,
which provides induction materials such as Group policies,
structure charts, terms of reference, Delegated Authorities
Manual, broker notes, and past Board and committee meeting
papers and minutes.
Director training schedule 2024
Examples of the training expected to form part of the 2024
training programme include:
– Snoop Deep Dive; and,
– Vanquis Assist - Forbearance Overview.
Ongoing director training
It is important that our directors are made aware of any
upcoming developments and receive training tailored to their
roles at the Company, given the ever-changing economic and
regulatory environment.
Directors undertake training both as a Board as a
whole and based on individual requirements to assist
them in carrying out their duties and responsibilities.
At least annually, the Chairman discusses with each director
his or her contribution to the work of the Board and personal
development needs.
During 2023, the directors were provided with deep dives,
teach-ins, briefings and presentations on a range of key
subjects, including the following:
– Market Abuse Regulation training;
– Consumer Duty;
– RemCo NED refresher training; and
– Group reward structure and mechanisms.
Members of the Board also visited our Chatham, Petersfield
and Bradford offices.
The director training is overseen by the Company Secretary and
can be internally or externally facilitated, with sessions typically
originating from technical Board discussions or an identified
training opportunity. Directors are requested to refresh their
understanding of current obligations and recent developments
in areas pertinent to their role; they are also given access to an
external online academy tool which provides a wide array of
briefings, education and bespoke training.
Each year management carries out a fit and proper
assessment for all senior managers and certified colleagues
under the SMCR process. This process involves requesting
annual learning and development plans which are forward
looking for our executive team members. The Talent team is
also engaged in the process to ensure all annual mandatory
training has also been completed.
In July, Sir Peter Estlin and Michele Greene visited the Moneybarn
office in Petersfield and received an overview of the vehicle
finance business, which included updates on financial models and
budget. They also met with the Chief Risk Officer and Chief Credit
Officer and topics of discussion included business priorities, credit
risk trends and a strategic projects update.
Peter then visited Bradford in August and had some informal
discussions with colleagues. Peter also made a further visit to the
Chatham office in August and met with management; a broader
Q&A session took place where colleagues took the opportunity
to ask questions.
Assessing Board performance – annual Board review
Continuous improvement of the Board’s effectiveness
2021 2022 2023
Internal evaluation facilitated by Chair and
Company Secretary
External evaluation facilitated by
Independent Audit
Internal evaluation facilitated by Chair and
Company Secretary
The Board seeks to continually improve its performance by undergoing a formal annual review and reviewing the focus areas
and actions arising from this formal review during the year to ensure their effectiveness is subject to ongoing review rather than
a point in time exercise. In accordance with best practice and the UK Corporate Governance Code, the Board’s formal annual
effectiveness review is conducted by an external facilitator every three years as part of a three-year review cycle.
2023 review process Stakeholders input
Scope, objectives and design: The Chair and Company Secretary agreed the scope of the review, its objectives and
design. The approach took into consideration the short tenure of the Chair. Detailed questionnaires were designed, agreed
and issued in respect of the following areas: Board and committee effectiveness, Chair effectiveness, individual director
effectiveness and management feedback on Board effectiveness.
– Chair
– Board
– Company
Secretary
– Management
Data collation and analysis: Responses to the questionnaires were collated and analysed by Company Secretariat and anonymised
reports were prepared summarising the effectiveness of the Board and its committees, the Chair and the individual directors.
Review of results: The draft report on Board and committee effectiveness was reviewed by the Chair and a final report
shared with the wider Board. The Committee Chairs received a committee effectiveness report which was discussed by the
committees. The Senior Independent Director received the Chair’s effectiveness report. The individual directors’ effectiveness
reports were shared with the Chair to inform individual performance reviews.
– Board
– Committees
– SID
– Group CPO
Board discussions, actions and ongoing monitoring: The Nomination Committee and Board discussed the results of the Board and
committee effectiveness report. Focus areas and actions arising from the review were agreed and owners assigned for each action.
Led by the Senior Independent Director, the Board members (excluding the Chair) met to appraise the Chair’s performance. The
Board will consider the progress made against the focus areas and actions arising from the 2023 review during 2024.
Vanquis Banking Group plc Annual Report and Accounts 2023
72
Governance
Board and committee effectiveness review
The Board was regarded as being highly skilled and
experienced with regards to the financial services industry
and the effective collaboration, challenge and relations
between members made the Board an effective team with
good diversity of thought. It was identified that the Board’s
skillset in technology and experience in retail banking and its
ethnic diversity could be improved and these requirements
would be prioritised in future succession planning and Board
appointments. The size and composition of the Board required
ongoing assessment by the Nomination Committee to ensure
it continued to reflect the needs of the business. While the
committees continued to operate effectively, it was felt
that it should be considered whether the responsibilities of
the CCE Committee would now be better placed through
embedding them in the responsibilities of the Board and/
or other committees. Management feedback indicated
a positive working relationship between the Board and
Management overall.
Individual director effectiveness review
Individual director performance was assessed with individual
performance discussions held with the Chair. The Nomination
Committee conducted its annual review of the Board and
committee composition. Having considered the skills,
experience and time commitment of each director, and
the independence of the NEDs, the Nomination Committee
concluded that all directors should stand for re-election at the
2024 AGM except Elizabeth Chambers and Margot James who
will not stand for re-election as set out on page 53.
Chair effectiveness review
Whilst the Chair had only been in this role since September,
the initial impressions and performance of the Chair were
positive. The Chair was recognised as having effective
communication skills, and being candid, supportive and an
attentive listener. Directors felt that in 2024 the Chair should
focus on maintaining the Board’s effective team dynamic,
ensuring sufficient time for debate is given to strategic
discussions in meetings, and providing clear feedback
on investor expectations.
Strengths identified from the 2023 review Agreed actions/focus areas for 2024
– Highly skilled and experienced Board with good gender diversity
and diversity of thought. The Board was considered an effective
team with strong collaboration.
– Review the approach and oversight of NED and senior
management succession planning.
– Feedback from management indicated a good working
relationship between the Board and senior management.
– Keep under review the appropriate size, composition, skills and
experience and diversity on the Board as part of succession
planning and Board appointment processes. To include a focus
on technology skills as part of proactive succession planning.
– Committees effectively carry out their oversight role and
responsibilities and Committee Chairs regularly update the Board
on its committees’ activities.
– Consider whether the CCE Committee’s work would be
better placed under the Board and/or other committees
to enhance oversight.
– Strong relationship and engagement with the Group’s regulators
and a good understanding of the macropolitical environment.
– More site visits and focus on engagement with the Executive
Committee and wider management and workforce.
– Improved oversight and reporting of risk to the Board following
feedback from previous Board effectiveness reviews.
– Review the Board meeting agendas and management reporting
to improve the Board’s oversight and discussions on areas of
strategic importance.
Focus areas identified from the 2022 evaluation
Focus area Progress update
Review the Board’s approach to monitoring
strategy delivery, including strategic
milestones and KPIs.
A new CEO Dashboard which tracks KPIs aligned to the Group’s strategic pillars was developed
and implemented and was reported to the Executive Committee and Board.
Review the Board’s approach of overseeing
the Group’s technology strategy and its
implementation.
The Board reviewed its oversight of the Group’s technology change programme and agreed an
approach that provided both internal and external updates and validation to the Board of the
Group’s technology strategy. The Group CIO also provides regular updates to the Board on IT,
digital and change.
Keep under review the key priorities for
the skills required in new non-executive
directors as part of succession planning
and Board appointment processes.
The Nomination Committee reviewed the results of the 2022 Board review relating to the
composition of the Board as well as the results of the 2023 Board Skills Matrix to identify skills
and experience gaps to inform our proactive succession planning process. The Nomination
Committee added two new skills criteria to the Board Skills Matrix to reflect the skills and
experience required on the Board to deliver the Group’s strategic objectives.
Review the regularity of Board updates
from Product Managing Directors and wider
Executive Committee team.
The Board and committees’ Agenda Planners were reviewed and updated to give the Product
Managing Directors and wider Executive Committee team sufficient exposure to the Board.
All Product Directors and Executive Committee members presented to the Board and/or
committees during 2023.
Review Board committee meeting
attendees to ensure the Board committees
continue to have access to the information
and expertise needed to undertake
their responsibilities.
The Company Secretariat facilitated a review of committee attendees with senior
management, the CEO and Committee Chairs. The attendees that were required to attend
each meeting and the attendees that would be invited to present certain business items were
agreed for each committee.
Outcome of the 2023 Board and committee effectiveness review
Vanquis Banking Group plc Annual Report and Accounts 2023
73
Governance Financial statementsStrategic Report Shareholder information
Role of the Committee
The Nomination Committee is responsible for
overseeing:
– the evaluation of the Board and its Committees which
includes overseeing the Board’s composition, size and
structure, including the Board committees, so that it remains
appropriate and effective in order to deliver the Company’s
strategy;
– the Board appointment and succession planning processes;
– the Group’s talent management framework and senior
management succession planning to ensure the Group’s
leadership needs are met now and in the future; and
– the diversity of the Board and the Group’s talent pipeline
to meet the Group’s diversity objectives and to increase
the percentage of roles held by women and other
underrepresented groups across the Group.
Allocation of time
Sir Peter Estlin
Nomination Committee Chair
Nomination Committee Report
Ensuring effective leadership
now and in the future
Dear Shareholder
I am pleased to present the important work undertaken by
the Nomination Committee during 2023 in my first Nomination
Committee Report as Chair. The Committee continues to be
comprised of all the non-executive directors: their biographies
are on pages 54 to 56 and meeting attendance on page 70.
Following Ian McLaughlin’s appointment as CEO, reported in
last year’s report, the Group’s strategy and leadership are
evolving to meet our customers’ needs and to deliver the best
results for our stakeholders. As part of succession planning
and in alignment with our evolving strategy, the Committee
has focused on succession planning for the Board and
senior management and on Board composition. During the
year, in addition to the appointment of Ian McLaughlin and
Michele Greene, which we reported on in last year’s report,
the Committee recommended to the Board my appointment
first as non-executive director and then as Chair and the
appointment of Dave Watts as CFO, with more details below.
The annual formal Board effectiveness review and Board Skills
Matrix are valuable tools that have been used by the Committee
during 2023. The Committee considered the results of the 2022
Board effectiveness review as it related to areas within the
Committee’s remit. The Committee also considered the results
of the 2023 Board effectiveness review, including impact on
composition, and recommended to the Board the focus areas
and actions for 2024. You can read more about our formal Board
review on page 71. Furthermore, the Committee updated the
Board Skills Matrix to reflect the skills and experience required
on the Board to support delivery of the Group’s strategy. The
Board members completed the updated Board Skills Matrix
which helped inform the Committee’s discussions around
succession planning and Board effectiveness. Membership
of each Board committee has been considered as part of the
2023 Board effectiveness review and the succession planning
overseen by the Committee, in addition to our annual review of
Board and committee composition. This led to Graham Lindsay
being appointed as Chair of the Remuneration Committee and
consideration given to whether the responsibilities of the CCE
Committee would be better placed through embedding them
in the responsibilities of the Board and/or other committees in
order to heighten our focus and attention on our customers.
Overseeing the Group’s diversity targets to ensure a diverse
leadership and workforce was another focus area of the
Committee during the year. This will continue to be a focus
area in 2024 to monitor progress made against our diversity
targets. Succession planning for senior management and for
non-executive directors will also continue to be focus areas
for the Committee in 2024.
Diversity 16%
Succession and talent 25%
Board composition and
appointments
44%
Governance 15%
The Committee’s Terms of
Reference are available at:
www.vanquisbankinggroup.com
“ The Committee has taken the leading
role in evolving the Board’s composition
as it looks to champion Vanquis’ long-
term success through its focus on our
leadership and talent.”
Sir Peter Estlin
Nomination Committee Chair
Vanquis Banking Group plc Annual Report and Accounts 2023
74
Governance
Chief Financial Officer (CFO) appointment
Following the announcement on 7 August 2023 that
Neeraj Kapur was stepping down as Chief Finance
Officer (CFO), RRA was engaged to commence a rigorous
search to identify potential successors. As part of the
Group’s talent management and proactive succession
planning approach, succession to the CFO role had
been considered and planned for, which included the
Group remaining informed of internal and external
talent. This proactive succession planning approach
enabled the Group to promptly effect a thorough search
and appointment process, overseen by the Nomination
Committee, to identify suitable internal and external
candidates for the Nomination Committee to consider and
recommend an appointment to the Board.
A job specification and desirable skills and experience for
candidates were agreed for the role. The search process
for candidates used objective criteria covering experience
and skills, personal qualities including alignment with
the Group’s social Purpose and culture, and took into
account the benefits of diversity in its widest sense to
provide a longlist of internal and external candidates.
From an initial potential candidate list of 16 candidates
(with 31% female representation), the Committee
reviewed an external shortlist of five candidates (with
40% female representation). The shortlisted candidate
underwent rigorous evaluation and assessment
by RRA and three external shortlisted candidates
progressed to be interviewed by Board members. The
Nomination Committee, after considering the results
of the assessment and interview and the impact on
Board composition, including gender ethnic diversity,
identified Dave Watts as the strongest candidate and
recommended his appointment as CFO which the Board
approved. Dave Watts is a highly experienced banking CFO
who is a proven strategic partner and has worked across
complex regulatory regimes and entity structures. You can
read more about Dave Watts in his biography on page 54.
Nomination Committee Report continued
Principal decision: Appointment of Chair
The Board approved the re-naming of the Company to Vanquis Banking Group plc.
As announced on 30 June 2023, the Board approved the appointment
of Sir Peter Estlin as Chair of the Board following a thorough search
process overseen by the Nomination Committee, and supported
by Russell Reynolds Associates (RRA), which led the Committee
to recommend to the Board that Sir Peter be selected for the role.
This was an internal appointment as Sir Peter joined the Board as a
non-executive director in April 2023 following an extensive, rigorous
and transparent search process supported by Korn Ferry which
led the Nomination Committee to recommend his appointment
to the Board after consideration was given to his skills, experience,
leadership style, alignment with the Group’s social Purpose,
time commitments and independence. In relation to Sir Peter’s
appointment as a non-executive director, a role specification
was agreed which sought to identify candidates with skill and
experience areas which would enhance the Board’s effectiveness
as it sought to deliver its banking strategy. As part of his appointment
as non-executive director, Sir Peter was interviewed by the Board
members. A key aspect of our non-executive candidate requirements
was cultural fit and a natural affinity and empathy with the Group’s
Purpose and our customers. The candidate specification was
prepared to clearly recognise the value of diversity and inclusion
and to reflect that diversity in its broadest sense was a key priority
for our search.
Chair’s succession planning
Following the announcement on 19 May 2023 of Patrick Snowball’s
intention to step down as Chair from the Board, the Nomination
Committee, chaired by Andrea Blance, Senior Independent Director
(SID), met to determine the process for the search for a successor
and to engage Russell Reynolds Associates to support the process.
The Nomination Committee, led by the SID supported by the Chief
People Officer and General Counsel and Company Secretary, worked
with Russell Reynolds Associates to develop a person specification
for the Chair’s role and agree on the skills and criteria for the role,
which included the following: experience and competence as a PLC
Chair; sectorial experience in retail banking; track record of building
strong stakeholder engagement; excellent business acumen and
experience; leadership style and alignment to the culture and values
of the Group; and skills in mentorship and people development.
Throughout the succession planning process, the SID kept the Board
and investors updated on the succession process.
The search process
Sir Peter Estlin had been identified as an internal candidate
fitting the criteria in the role specification. An external search was
conducted by RRA to identify a long list of external candidates
before a benchmarking exercise was completed, using the firm’s
market knowledge gained from other Chair searches to benchmark
Sir Peter Estlin against the external candidates. This external long-
list comprised nine candidates, with 44% female representation.
Given the importance of the CEO and Chair’s working relationship,
the incoming CEO (Ian McLaughlin) was engaged to provide his
view on the longlist of candidates. The Group’s regulators were
kept updated throughout the succession process by the Chief Risk
Officer and Sir Peter Estlin met with the FCA before his appointment
was recommended to the Board.
Selection of the new Chair
The Board, led by the SID, established a sub-committee to oversee,
finalise and agree the terms of the Chair’s succession based on the
recommendations of the Nomination Committee, and to facilitate
the Chair’s appointment and announcement to the market. The
Nomination Committee, having carefully considered the findings
of RRA, identified Sir Peter Estlin as the strongest candidate and
recommended his appointment as Chair to the Board, which was
subsequently approved by the Board’s sub-committee, chaired by
the SID. The following factors were some of those key in the decision
made to appoint Sir Peter: his outstanding sectorial experience
in retail banking and his financial and strategic capabilities; his
strong cultural fit and alignment with the Group’s customer-focused
Purpose; his stakeholder engagement experience and his credibility
with regulators; his position as champion of digital innovation and
skills; and the incoming CEO’s positive reception to the proposition
of working with Sir Peter Estlin.
Our Board Diversity Policy supports the engagement of executive
search firms which have signed up to the Voluntary Code of
Conduct for Executive Search Firms on gender diversity and best
practice. Other than for recruitment and related talent advisory
services, RRA and Korn Ferry have no other connection to the
Company or individual directors. RRA and Korn Ferry are signatories
of the Enhanced Voluntary Code of Conduct for Executive Search
Firms, which specifically acknowledges those firms with a strong
track record in and promotion of gender diversity in FTSE 350
companies against the scope of the Davies Review.
Links to stakeholders Links to strategic themes
1
5
Links to risks
P1
P10
P11
Links to s.172
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
Talent management and succession
The updated Group-wide talent management framework
rolled out last year has improved the visibility of talent which
supported the Committee’s role in talent identification and
succession planning for senior management during the year.
Leadership changes were made in the second half of 2023
under the new CEO to align with the Group’s evolving strategy
and ensure that the right roles and capabilities were in place
to deliver this strategy. We successfully used our internal
talent pipeline to fill vacancies at Executive Committee level,
including the role of Chief Technology Officer and interim
positions of Chief Financial Officer, Chief Customer Officer and
Chief Digital, Data and Analytics Officer. We also attracted
high-quality external hires such as Jillian Anderson as Chief
Customer Officer and Abigail Whittaker as Chief of Staff, who
both joined the Group in 2024. Gender balance and broader
diversity continues to be a key priority on the talent agenda
and in all search processes.
As part of its review of talent and succession planning,
the Committee considered the impact of operating model
changes on the retention of talent, the succession of key
roles, individual development plans, and the diversity of
senior management. Succession plans for key Executive
Committee roles, including the executive directors, were
discussed, including the diversity of our talent pipeline, and
the development and aspirations of senior management. The
Committee was updated on the actions in place to improve
the diversity of the talent pipeline. The Committee considered
retention risk and our colleague training and development
proposition as part of its talent management review. Following
review and feedback by the Committee, during 2024 the
Group CPO and Executive Committee will continue to work
together to enhance succession and development plans for
senior management and the layers below to support internal
succession, reduce retention risk and further build a pipeline
of diverse talent.
The Committee has continued to oversee non-executive
director succession plans to ensure that the Board
membership is appropriately refreshed, reflecting director
tenure. During 2023 it remained key to take a proactive
approach in order to stagger succession in the future, thus
retaining the balance of skills, experience and diversity the
Board needs to enable delivery of its responsibilities and
the Group’s strategy. The Committee considered what skills
and experience were required on the Board now and into
the future, the progress made during 2023 in identifying
non-executive talent for future Board appointments and
how our recruitment process would enable us to identify
the best candidates with varied transferable skills to support
achievement of Board diversity objectives including skills,
gender, age and ethnicity. Non-executive director succession
remains a priority area for the Committee during 2024 as the
tenure of the Board members lengthens.
At its meeting in January 2024, the Committee reviewed
and confirmed its support for a proposal to recruit a Board
Observer. This programme seeks to support the wider
development of the talent pool of experienced executives
who, although interested in non-executive roles, do not have
experience in such roles. This programme will also support
our Board’s skills and experience in technology and also our
priority of ensuring broad diversity around the Board table. We
appointed Kate Rosenshine, a serving executive at Microsoft,
as a Board Observer from March 2024 for one year. Kate brings
a wide range of experience in technology, AI and native digital
partnerships.
Inclusion and diversity
You can read about our approach to diversity and inclusion
on pages 14 to 16. Our Inclusion and Diversity (I&D) Policy,
which includes our Board Diversity Policy, is designed to
promote equality, diversity and inclusion across all parts
of the Group and aims to ensure that we have an inclusive
and positive working culture that supports equality, inclusion
and diversity and to create an environment where everyone
feels included and valued. Our I&D Policy covers a range of
protected characteristics including age, gender, ethnicity,
sexual orientation, disability or educational, professional and
socio-economic backgrounds. The policy seeks to enable all
colleagues to reach their full potential and contribute fully to
the success of the business. By delivering our I&D and Board
Diversity Policies’ key aims, we believe that we can support
the delivery of our strategy through leveraging the benefit
of a wider range of perspectives and ideas, contributing to a
high-performing and effective leadership team which brings
greater diversity of thought to better respond to our diverse
customer base and stakeholder views. By having a diverse
Board, and Board committees, we believe the Board is better
placed to challenge management, consider stakeholder
views, make better decisions and deliver the Group’s
strategic aims.
Our Board Diversity Policy ensures that the selection process for
Board appointments is based on merit and requires the Board’s
standing sub-committees to be appropriately composed in
order to undertake their duties effectively, including appropriate
balance of diversity, whilst also ensuring diverse shortlists for
Board roles. When reviewing Board appointments during the
year, the Board considered the impact of such appointments
on the diversity of the Board standing sub-committees. Our
policy, which was reviewed by the Committee during the year,
confirms our commitment to measurable objectives and you
can read about the objectives of our Board Diversity Policy, and
our progress against these, below.
The Committee has received updates on progress made
against the Group’s diversity and inclusion strategy, including
improving our diversity data and supporting initiatives, such
as the Group’s Inclusion Community and Affinity Groups, to
help create a diverse and inclusive pipeline of talent. During
the year, the Committee reviewed our progress against our
diversity objectives and our compliance with the diversity
requirements set out in Listing Rule 9.8.6. The Group is a
signatory to the Women in Finance Charter and is committed
to achieve 40% female representation in senior management
by 31 December 2026.
This year we decided to extend our target date from 2024 to
2026 following the Group’s operating model restructure and
business transformation that took place at the end of this
year, which included senior management changes being
made to align leadership with the capabilities required to
deliver the Group’s strategy. For the purposes of this target we
have identified roles at our Level 14 and above as the relevant
population and female representation in this population was
34% as at 31 December 2023. Female representation in our
Executive Committee and direct reports population was 37%
as at 31 December 2023, demonstrating positive progress
on the position reported in last year’s report.
Vanquis Banking Group plc Annual Report and Accounts 2023
76
Governance
Inclusion and diversity continued
Board diversity objectives Progress and implementation
To maintain a minimum of 40% women (including those self-
identifying as women) on the Board.
During the year the Nomination Committee agreed to amend this
objective to increase the targeted female representation on the
Board from one-third to 40%. As at 31 December 2023, 50% of the
individuals on the Board of Directors were women, with 44% female
representation as at the date of this report. As reported above,
diversity remains a key focus for Board appointment processes.
To maintain for at least one of the senior Board positions (Chair,
CEO, SID or CFO) to be a woman (including those self-identifying
as a woman).
As reported below, we meet this objective.
To maintain a minimum of one Board director from an ethnically
diverse background in support of the Parker Review target.
Whilst the Group is not currently captured by the targets set by the
Parker Review, we remain focused on ensuring we meet this target.
Although during the year this target was met, following Board
membership changes, as at 31 December 2023 and as at the date
of the report we no longer meet this target. However, following the
Board changes that will take effect on 27 March 2024, as reported
in the Chair’s Governance statement on page 53, the Company will
again meet this target with effect from that date. Diversity, including
ethnic diversity, remains a key focus of our Board appointment
process as described above. We continue to work with our external
recruitment partners to drive diverse candidate shortlists. One of our
focus areas is to formally establish our Race at Work Charter action
plan and to work within the scope of the Parker Review requirements
to define and set a percentage target for ethnically diverse leaders
in job positions at Level 14 and above.
The Board will support and monitor Group activities undertaken to
meet its diversity objectives and to increase the percentage of senior
management roles held by women and other underrepresented
groups across the Group.
Continued review of the Group’s inclusion and diversity strategy and
initiatives. When reviewing talent management and succession, the
Committee has reviewed the diversity of our talent pipeline.
To ensure Board appointment ‘long-lists’ reflect the Board’s diversity
commitments.
Our Board Diversity Policy confirms our commitment that all shortlists
for our Board and senior management positions are balanced from
a gender perspective. This remained a key focus for the Chairman
and Nomination Committee as part of recruitment process
during 2023.
To ensure a rounded and diverse Board and Executive Committee,
appointments will be made on merit, taking into account different
backgrounds, diverse experience, perspectives, personalities, skills
and knowledge, and alignment with the Group’s culture.
As required by our I&D Policy, including the Board Diversity Policy,
appointments are made on merit, taking into account diversity
and alignment with the Group’s culture. Diversity forms a key
consideration of Board appointment and succession planning
processes. You can read more about our Board appointment
processes on page 74.
Nomination Committee Report continued
Vanquis Banking Group plc Annual Report and Accounts 2023
77
Governance Financial statementsStrategic Report Shareholder information
Explanation against LR 9.8.6(9) and data under LR 9.8.6(10)
As at the Company’s chosen reference date, 31 December 2023, and in line with FCA Listing Rule 9.8.6(9), the Group confirms
it has met the targets for at least 40% female representation on the Board and one of the senior positions of Chair, SID, Chief
Executive or Finance Director to be held by a woman, with Andrea Blance appointed as SID. The Company has not met the
target as at the reference date for one director to be from an ethnic minority background. The Company did meet this target
during the year until 7 August 2023; however as a result of Board changes during the year we no longer meet this objective as
at 31 December 2023. However, following the Board changes that will take effect on 27 March 2024, as reported in the Chair’s
Governance statement on page 53, the Company will again become compliant with each of the Board diversity targets set out
in LR 9.8.6(9) with effect from that date. Diversity, including ethnic diversity, remains a key focus for future Board appointments
and our succession planning, as described throughout this report, and meeting this target remains one of our Board diversity
objectives. Our approach to collecting gender and ethnic diversity data was consistent and carefully implemented. Using a
survey issued by a secure platform to collect the data and working closely with our Data Protection team, ensuring that we met
all data protection regulations. Prior to the survey being issued, we provided a briefing to assist in everyone understanding the
purpose and importance of collecting this information. The survey included questions related to sex at birth, gender identity
(whether it remained the same as at birth), and ethnicity. To deliver a comprehensive understanding of the diversity within
our Board and senior management, while also respecting individuals’ privacy, we provided the option for Board members to
choose ‘prefer not to say’ for any of these questions. Since the reference date, Andrea Blance has stepped down as SID. With the
appointment of Angela Knight as SID we remain in compliance with the requirement that one of the senior positions of Chair,
SID, Chief Executive or Finance Director should be held by a woman. Following this change, as at the date of the report we also
remain in compliance with the requirement for at least 40% female representation on the Board.
Gender representation as at 31 December 2023
Board Executive Committee
Number of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage of
executive
management
Men 5 50% 3 7 70%
Women 5 50% 1 3 30%
Prefer not to say/other/unspecified — — — — —
Ethnic representation as at 31 December 2023
Board Executive Committee
Number of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO, SID
and Chair)
Number in
executive
management
Percentage of
executive
management
White British or other White
(including minority-White groups) 10 100% 4 10 100%
Mixed/multiple ethnic groups — — — — —
Asian/Asian British — — — — —
Black/African/Caribbean/Black British — — — — —
Other ethnic group, including Arab — — — — —
Not specified/prefer not to say — — — — —
Sir Peter Estlin
Nomination Committee Chair
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
78
Governance
Customer, Culture and Ethics Committee Report
Role of the Committee
The Committee is responsible for:
– reviewing the design and performance of the Group’s
products and specifically testing for their market fit, suitability
for our target customers, and good customer outcomes;
– overseeing the development, embedding and monitoring
by management of the Group’s Purpose, values, customer
objectives, culture and ethics;
– overseeing the Group’s efforts to ensure that its policies, business
practices, procedures, systems and behaviours are consistent
with improving the customer experience;
– reviewing and providing guidance for external communications
and the Group’s public posture on key reputational issues, e.g.,
financial inclusion, diversity and sustainability (ESG agenda:
environment, social, governance);
– ensuring that appropriate arrangements are in place to
support compliance with the 2018 UK Corporate Governance
Code; and
– ensuring that appropriate stakeholder and employee
engagement mechanisms in relation to the Group’s Purpose,
culture and ethics, are in place.
Allocation of time
Elizabeth Chambers
Customer, Culture and Ethics Committee Chair
Overseeing our
people and culture
Dear Shareholder
I am pleased to present an overview of the Committee’s
work during 2023.
This year, the Committee focused on regular review of our
Customer Conduct Dashboard. We also undertook a review
of the new loans product and its suitability for our target
customer audience. Other priorities included a review of the
Group’s move of its operational processes and resources to
outsourced partners based in South Africa, through the lens of
our continuing commitment to customer-centric service and
support. We provided input to and oversight of the launch of
the Group’s refreshed values, The Vanquis Way. These values
set out how we work together with each other, our customers
and our communities. They reflect the things we believe are
most important in delivering our Purpose, and they underline
the way we come together to make our business a great place
to work. You can find our values alongside our Purpose on the
inside front cover.
The Committee had four independent non-executive directors
during 2023 following Michele Greene’s appointment.
The biographies of the members, Graham Lindsay,
Michele Greene, Margot James and me, are available on
pages 55 to 56.
Our customers
The Committee continued to embed a KPI and evidence-
based approach to its work, and supported management’s
efforts in this regard. During 2023 the Committee received
regular updates on the Conduct Risk Dashboard and discussed
improving trends, as well as any areas of concern identified in
its metrics. The Dashboard enables the Committee to monitor
the metrics in each of the product lines. As an example, the
Committee noted that the ‘dormant accounts’ metric on
the Cards Dashboard had become outside tolerance and
members explored the reasons for the decline. We supported
the expansion of a dormancy programme which included
more proactive strategies to engage and retain or eventually
close accounts for dormant customers if re-engagement didn’t
happen. These efforts target an improvement in the related
metrics to ‘Green’ by the end of the first quarter of 2024.
The Committee received ongoing updates on the Consumer
Duty programme and was comfortable that the programme
was on track for delivery and critically that our management
information and the above referenced Dashboards would
support sustained delivery of our obligations under the Duty.
“ In 2023 the CCE Committee actively
supported the development and launch
of The Vanquis Way, which embodies the
core values that guide how we serve and
support customers in every product and
channel. Colleagues embraced these
enthusiastically and felt they were directly
supportive of both our Purpose, and our
Consumer Duty obligations.”
Elizabeth Chambers
Customer, Culture and Ethics Committee Chair
KPI tracking and
Customer Call Listening
30%
Reviewing policies to ensure
they support the Group’s
culture
20%
Monitoring governance,
ESG commitments and
CR reporting
30%
Monitoring stakeholder
expectations
20%
The Committee’s Terms of
Reference are available at:
www.vanquisbankinggroup.com
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
During April 2023, the Committee reviewed and fully supported
vehicle finance’s new product proposition, lending to customers
who choose a personal contract hire. The vehicle finance
business has now entered into a Master Services Agreement with
Zest Leasing Limited to offer non-prime customers access to new
cars by way of a contract hire leasing agreement.
In 2021 the Group exited the high-cost credit market and
closed its home credit division, which meant the Group’s
name and brand were linked to a market it no longer served
and a business that no longer existed within the Group.
We therefore decided to rename and rebrand, as the old
name and brand no longer accurately represented what
the Group had become, a digital bank offering credit cards,
vehicle finance and loans. The Group therefore became
Vanquis Banking Group, linking our corporate entity to its
biggest consumer brand, Vanquis. The corporate rebrand
and name change was completed successfully in the
first quarter of 2023, with the change being well received
by shareholders, colleagues and customers.
At the November meeting the Committee reviewed the
loans product range, and specifically the loans customer
journeys. It was clear from research that most of the new
loans customers borrowed money for the purpose of debt
consolidation and home improvements, which aligns with
our goal of responsible lending and helping people improve
their financial lives.
The Committee regularly listened to a selection of customer
calls. At each meeting the Committee discussed the calls and
agreed that, generally, the quality of service provided by the
customer facing colleagues was of a high standard. Listening
to these calls offers insight for the Board into the day-to-day
operations and our customers. The Committee noted that
the areas of improvement that had been identified had been
taken forward by management. The Committee also had full
oversight of the whistleblowing activity during the year.
Values – The Vanquis Way
We believe that our culture is shaped and changed through
our everyday actions - actions that apply to all of us, no
matter where we are in the business. In April 2023 we officially
launched our new values. The values are easy to both
remember and build into our daily lives as they are all about
how we get the best job done. Our values are designed to
guide decision making and the way we work together with
customers, communities and each other. Fully embedding
The Vanquis Way will take time and effort from all. We’ll need
to focus on our daily habits, recognising and highlighting
colleagues who get it right, and challenging any behaviours
that are not in keeping with The Vanquis Way.
The Committee reviewed the results of the latest Colleague
Survey and also an additional Culture Survey which was
undertaken during the year. We considered how insights
from the Culture Survey would be used to guide colleague
engagement by executive leadership and also supported
team culture sessions, where management explored results
and gathered further insights from colleagues.
Vanquis Banking Group Foundation
The Vanquis Banking Group Foundation supports our
customers and communities across the UK. During the year
we launched our new Vanquis Banking Group Foundation
programme. Our Foundation aids financial inclusion and
social mobility, supporting children and young people in the
communities we’ve served since 1880. It’s aligned with our
Purpose, to deliver caring banking so our customers can make
the most of life’s opportunities.
The Foundation has an annual budget of £2.5m and builds on
our sustainability programmes to further support social and
financial inclusion for children and young people.This includes
the Vanquis free school uniform fund which will be doubled,
helping hundreds more pupils, and continued partnerships
with community foundations from Bradford to London. The
Foundation is another way in which we can support people
to become more financially and socially included in society.
Our work helps those people we are able to reach achieve
their full potential at school and access better employment
opportunities and reduces inequalities. All of this is closely tied
to our Purpose.
Environmental considerations
During the year, the Committee received updates on how
the climate risk agenda was being governed and managed
across the Group. This included an update on the Group’s
environmental and climate change strategy and the science-
based targets. The Committee supported the Group in its
contribution to the movement towards a low carbon economy
and in setting our targets. The progress being made by
management in setting carbon reduction targets which
align with current climate science-based targets can be
found in the Group’s TCFD/Climate Report on pages 19 to 28.
Throughout the year, we have engaged with colleagues via
the intranet site on a range of issues such as why we measure
and report our carbon footprint. For more information see our
ESG Report on pages 14 to 31.
Following this year’s Board effectiveness evaluation and
recent changes in Board and executive leadership, we
agreed that the time is now right to ensure that oversight
of the matters within the Committee’s remit would receive
even more focus by embedding them within the main Board
agenda, with some of the responsibility areas also being
assigned to other committees. Accordingly, this will be our
final Committee report and each of the Committee members
look forward to further strengthening the Board’s essential role
in overseeing our duties to customers, colleagues, our culture
and the communities we serve.
Elizabeth Chambers
Customer, Culture and Ethics Committee Chair
26 March 2024
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80
Governance
Audit Committee Report
Role of the Committee
The Committee assists the Board and is responsible for
overseeing the following:
Financial reporting
– monitoring the integrity of the financial statements, and any
other published financial information, and reviewing the
significant financial reporting judgements therein;
– advising the Board on the Annual Report and Accounts,
including whether it is fair, balanced and understandable;
– assisting the Board in assessing the Company’s going
concern status and ongoing viability;
External audit
– conducting the tender process and recommending to
the Board the appointment, remuneration and terms of
engagement of the external auditor;
– reviewing and monitoring the independence and objectivity
of the external auditor;
– assessing the effectiveness of the external auditor;
– implementing and monitoring the Group’s policy on non-audit
services;
Internal audit
– assessing and monitoring the effectiveness of the Group’s
Internal Audit function, including approving the annual
Internal Audit Plan; and
Internal controls and processes
– reviewing and monitoring the effectiveness of the Group’s
system of internal financial and operational controls.
Allocation of time
Paul Hewitt
Audit Committee Chair
Dear Shareholder
On behalf of the Committee, I am pleased to present the Audit
Committee Report for the year ended 31 December 2023.
The report details how the Committee has discharged its role
and duties during the year, and provides you with an overview
of the Committee’s key activities and areas of focus for 2023.
The report also confirms compliance with the Competition
and Markets Authority Statutory Audit Services Order.
The Committee’s membership remained unchanged as at
31 December 2023, comprised of non-executive directors
with me as Chair, Andrea Blance and Angela Knight, who is
also Chair of the Risk Committee. Andrea Blance stepped
down from the Committee on 1 February 2024. Members’
meeting attendance and number of meetings held can be
viewed on page 70 and details of their qualifications, skills
and experience set out in the ‘Our Board’ section on pages 54
to 56 of the Governance Report. As a whole, the Committee
is experienced and has competence and relevant financial
services sector experience, meeting the experience and
expertise criteria set out in the 2018 UK Corporate Governance
Code and the FCA Disclosure Guidance and Transparency
Rules (DTRs).
The Committee undertakes a review of its effectiveness
annually as part of the Board evaluation. More information
can be found in the Composition, succession and evaluation
section on page 70.
The Committee continued to monitor the output of the
Department for Business and Trade (DBT) review of audit
and corporate governance reform. In late January 2024 the
Financial Reporting Council (FRC) published the updated
the UK Corporate Governance Code. There are a number
of principal changes relating to internal controls and the
new Principle O which asks boards to make a declaration
in relation to the effectiveness of their material internal
controls. A number of provisions related to audit committees
have been removed and are now captured within the Audit
Committees and the External Audit: Minimum Standard. In
parallel, the implementation of the Integrated Assurance
Framework remained on track.
I look forward to reporting directly to shareholders at the
Annual General Meeting on 15 May 2024.
Audit, assurance and
internal control
Governance 13%
Financial reporting 36%
External audit 15%
Internal audit 22%
Management reporting 14%
The Committee’s Terms of
Reference are available at:
www.vanquisbankinggroup.com
“ During the year, the Committee
continued to focus its oversight
on the enhancement of internal
controlsandassuranceandfinancial
reporting which we continue to evolve
and strengthen.”
Paul Hewitt
Audit Committee Chair
Vanquis Banking Group plc Annual Report and Accounts 2023
81
Governance Financial statementsStrategic Report Shareholder information
Fair, balanced and understandable
In support of the Board, having regard to Provision 25 of the
Code, the Committee considered whether the 2023 Annual
Report and Financial Statements, when taken as a whole,
was fair, balanced and understandable. The Committee
adopted the same robust process as in prior years to justify
the statement. This included:
– reviews to provide input, and feedback incorporated
into subsequent drafts;
– oversight of the process, evaluation and verification by
Group senior management;
– external evaluations of the Remuneration and
Governance Reports respectively; and
– private sessions with the external auditor.
As part of the year-end processes, the Committee
considered management’s areas of significant
judgements, estimation, and uncertainty and emerging
issues as set out in the financial statements on pages
116 to 192, and with the external auditor, scrutinised and
challenged the going concern assumptions.
In assessing compliance with the Code, the Committee
considered the following criteria:
Is the Report fair?
– Is it a full reflection of events throughout the year
and consistent with messages communicated
throughout the year?
Is the Report balanced?
– Is the narrative reporting consistent with the financial
reporting?
– Are the statutory and adjusted measures
appropriately balanced?
Is the Report understandable?
– Is it presented in a logical order and using
clear language?
– Are important messages clearly highlighted as such?
– Is information shown in tabular or graphic form where
this would assist the reader?
Conclusion: The Committee concluded that, in its opinion,
the 2023 Annual Report and Financial Statements, when
taken as a whole, was fair, balanced, and understandable
and recommended this assessment to the Board.
Key Committee activities in 2023 Committee priorities in 2024
– Reviewed and recommended for approval the half-year
and full-year financial statements.
– Reviewed and approved the non-audit fees Policy;
external auditor interim review; external audit fees;
external auditor interim review; and external auditor
proposed 2023 plan.
– Reviewed and approved the Internal Audit Charter;
statement of independence and objectivity and
effectiveness; self-assessment; and 2024 Internal
Audit Plan.
– Continue to oversee and challenge the IFRS 9 model
rebuild and resulting financial impact.
– Reviewed and approved the internal statement of
governance, risk management and internal control,
including Group’s risk assessment processes and
preventative measures to prevent tax evasion.
– Confirmed sufficient distributable reserves and
recommended payment of the 2022 final dividend
(paid July 2023) and the 2023 interim dividend
(paid September 2023) to the Board.
– Oversaw transformation of the Group Finance function.
– Oversaw implementation of the Integrated
Assurance Framework.
– Board committee effectiveness evaluation outcomes;
reviewed and approved the Committee’s terms
of reference, 2024 forward agenda planner and
adherence with its terms of reference during 2023.
– Discussions with Head of Internal Audit or external
auditor following each Committee meeting.
– Continued embedding of the Integrated Assurance
Framework across the three lines of defence.
– Continued monitoring of the legislative and
regulatory landscape in relation to audit reform
and controls enhancements.
– Continued focus on enhancing the control environment
across the Group.
– Oversee transition of the IFRS 9 models. The Committee
will continue to independently oversee IFRS9 model
development, monitoring and calibration, and will monitor
progress against all internal and external audit findings
raised. Please see page 82.
– Further development of data analytics in the Internal
Audit function.
– Oversight of the new global internal audit
standards implementation.
Vanquis Banking Group plc Annual Report and Accounts 2023
82
Governance
In March 2024, Internal Audit confirmed that the Group’s
control environment has remained stable during 2023. The
known control issues within the legacy IT estates, including
access management, remain unchanged and will be fixed
strategically through the IT platform modernisation referenced
above. The Enterprise Risk Management Framework has
continued to embed throughout 2023. Finance controls are
documented in the Group-wide risk system, Riskonnect. These
are reviewed at regular intervals by control owners and/or
delegates to evaluate the efficacy and confirm that these
remain appropriate and effective.
The IFRS9 models have undergone significant development in
2023. Assurance from across the three lines of defence, and
External Audit has identified that further control improvements
are needed in the development, implementation and
oversight of the IFRS9 models. This is being prioritised in
2024. The Committee will continue to independently oversee
IFRS9 model development, monitoring and calibration, and
will monitor progress against all internal and external audit
findings raised.
Annually, Deloitte LLP provided a management letter which
identifies significant internal controls matters and the
management response.
Internal Audit
The Group operates an in-house Group Internal Audit (GIA)
function, managed by the Group Chief Internal Auditor who
reports to the Committee at each meeting. Specialist services
are provided by third-party consultants where necessary and
are subject to the Group policy for non-audit work. During
the year, the Group Internal Audit function executed the
approved annual audit plan. The plan is developed through
a risk assessment against each of the Group’s principal risks
(pages 45 to 50) and the methodology for its development
continues to be refined to ensure optimal risk coverage. The
audit conclusions for 2023 demonstrated a stable control
environment on the prior year. The Committee is satisfied that
the Group Internal Audit function is both independent and
effective, as detailed below.
Independence As required under the Institute of Internal
Auditors Code of Practice, the Group Chief Internal Auditor has
no responsibilities outside of oversight of the Internal Audit
function, and reports directly to the Chair of the Committee, with
an administrative reporting line to the Group Chief Executive.
The Committee holds regular private sessions with the Group
Chief Internal Auditor and the Chair also meets with the Group
Chief Internal Auditor at least quarterly or upon request.
Independence of the Internal Audit function is confirmed by the
Group Chief Internal Auditor through an annual attestation.
Effectiveness The Internal Audit Charter is approved annually
and the Committee regularly monitors progress against
the plan. Confirmation is also provided that the function is
appropriately resourced and has sufficient expertise to carry
out its mandate.
External Audit
Appointment and tenure
In accordance with Group policy, a formal tender process for
the position of external auditor was conducted in 2020 and
Deloitte LLP was selected for a further period of 10 years.
The Committee has the authority to commission a formal tender
process at any time it is deemed in the Group’s best interest.
The Committee concluded that Deloitte LLP continued to
perform in line with expectations and remained independent
of the Group, and will recommend to shareholders
reappointment at the 2024 AGM.
Effectiveness The Committee continues to hold private sessions
with the external auditor, in the absence of executive directors
or management. Four sessions were held during the year.
The sessions facilitate open and forthright discussions, and
for Deloitte to raise any concerns. In addition to this, the Chair
meets with the audit partner at least quarterly or upon request.
During the year, the Committee carefully considered the
risks associated with the Group control framework. Work
undertaken by GIA during the year, as part of the annual audit
cycle, has satisfied the Committee that the overall control
framework remains stable. Work undertaken by Deloitte IT
specialists identified some deficiencies in respect of user
access reviews; the Committee will ensure that the robust
remediation plan is implemented to address this during 2024.
Throughout the year, the external auditor challenged
management and demonstrated professional scepticism,
notably, debating with management the appropriateness of
the IFRS 9 and expected credit loss model rebuilds, controls
and governance processes.
The external auditor and audit quality is assessed annually
using scores and feedback from the Committee and
Group and Divisional Heads of Finance. Feedback and
scores were shared with the external auditor as part of the
commencement of the half-year review, and an action
plan developed for remediation requirements allowing
improvements to be incorporated.
The main remediation need identified in relation to the
2022 audit was for improving project management of
audit requests. The overall conclusion was that Deloitte LLP
remained effective.
Financial reporting process, internal control and risk management systems
Internal Audit and the Group Risk functions provide regular reports to the Committee in respect of the effectiveness of risk
management systems and internal controls. Where recommendations for improvement are made, these are agreed with
management and progress is monitored by the Committee at each meeting. The Group has been working on two long-term
improvement programmes, with progress as described below.
Area for improvement previously identified Progress to date
Implementation of a Group-wide integrated
risk system
The Integrated Assurance Framework is now embedded and supported by the Group-
wide risk system, Riskonnect, which facilitates a view of risks and issues across the Group
from all assurance activities. The system enhances the data available to the Committee
to monitor the effectiveness of the Groups internal controls. You can read more about our
risk harmonisation activity on pages 44 to 50.
The IT platform modernisation
A transformation programme is being executed which, over the next two years, will see
all products on a unified, modern cloud-based technology platform. The transformation
activity continues at pace and control issues within the legacy IT estates will be fixed
strategically through the transformation. The platform modernisation will also support the
automation of many controls. Control will be built into the platform by design, continuing
to enhance the overall system of internal controls.
Audit Committee Report continued
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
Independence and objectivity
The Committee ensures adequate safeguards are in place to ensure the independence and objectivity of external audit.
These include:
– a policy that restricts the recruitment of individuals employed by the external auditor into positions that provide financial
reporting oversight or exercise influence over financial and regulatory statements;
– non-audit work is subject to the policy detailed below and the non-audit team does not prepare anything which would be
relied upon in the Group audit;
– work performed is subject to an independent professional standards review and Engagement Quality Control Review process;
– the Committee considers the reappointment of the external auditor, including the rotation of the audit partner, annually.
The review considers both independence and effectiveness, primarily using a scorecard system. The lead Audit Partner,
Kieren Cooper, has been in place since May 2022 following a smooth transition period; and
– the external auditor attests its independence and objectivity to the Committee on an annual basis.
Non-audit work
A formal policy on the use of the external auditor for non-audit work, is in place and reviewed annually and adheres to the EU Audit
Directive and Regulations. The policy stipulates that non-audit work should only be awarded to the external auditor when there is
clear reason to prefer it over alternative suppliers, following a rigorous procurement process. All awards of non-audit work to the
external auditor are monitored to ensure that their independence, and perceived independence, are not compromised. The Chair
of the Audit Committee must approve in advance, any single award of non-audit work which has a value in excess of £50,000
per annum, or a programme of non-audit work with an aggregated value in excess of £50,000 per annum. Where the value is in
excess of £250,000, the approval by a quorum of the Audit Committee is required in addition to the Chair’s approval. Approvals
are also be subject to the cap on non-audit services as outlined in the policy. Deloitte LLP’s fees for non-audit work during the
year was £0.3m (2022: £0.7m) The ratio of audit to non-audit fees was 6.7:1.
Significant issues and areas of judgement
The critical accounting assumptions and key sources of estimation uncertainty considered by the Committee in relation to
the Annual Report and Financial Statements 2023 are outlined on pages 134 and 135. In addition to the matters set out below,
the Committee also considered the going concern statement set out on page 129. The Committee discussed these with the
external auditor during the year and, where appropriate, these have been addressed as areas of audit focus as outlined
in the Independent Auditor’s Report on pages 116 to 123.
Issue Judgement Actions
Impairment of amounts
receivable from customers
Receivables are impaired on
recognition in accordance with
IFRS 9. The impairment allowance is
initially dependent on the probability
of default (PD), the loss given default
(LGD) and the exposure at default
(EAD) within 12 months, discounted
at the original effective interest rate
(EIR). Lifetime losses are recognised
following a significant increase in
credit risk. The assessment of credit risk
and therefore impairment allowance
should be probability weighted,
and should utilise all information
available, including past events,
current conditions and supportable
forecasts of economic conditions at
the reporting date. An assessment of
macroeconomic factors, including
the latest economic forecasts, is also
required to estimate expected losses.
Judgement is applied to
the impairment allowance
required. This includes whether
past performance provides a
reasonable estimate of future
losses implicit within the PD, LGD
and EAD. In 2023, adjustments
made in relation to the cost-of-
living crisis, affordability, persistent
debt and Standard European
Consumer Credit Information
(SECCI) have been fully unwound
as the Group considers these
impairment provisions to be no
longer required. In addition, the
Group refined and recalibrated
the provisioning models for cards,
vehicle finance and personal
loans, to better reflect the evolving
receivables mix; this led to a
release of £57.7m of provision
as a post-model adjustment.
The Audit Committee reviews and challenges the key
judgements applied throughout the year. This includes
adjustments to determining significant increases in credit
risk and default. Post-model adjustments are reviewed and
challenged when impacting PD, LGD or EAD. The process of
creating future estimates is considered with peer analysis
performed. The design, implementation and testing of new
models and any associated model enhancements are
reviewed and challenged. The embedding of the refined
and recalibrated IFRS 9 models, along with the updated
model monitoring capabilities will be overseen by the
Committee, and the required ongoing monitoring of these
models together with associated controls will be reviewed
and challenged. Information becoming available following
the period end is assessed to determine if this would have
been available at the period end and included within the
assessments. The work performed by Deloitte LLP on validating
the management assumptions is considered. Findings are
presented in Deloitte LLP’s report to the Audit Committee which
is challenged with knowledge of the latest circumstances.
The work performed by Group Internal Audit is considered,
in particular, on technology and operational controls.
Retirement benefit asset
The valuation of the retirement
benefit asset is dependent upon a
series of actuarial assumptions. The
key assumptions are in respect of
the discount rate, inflation rates and
mortality rates used to calculate the
present value of future liabilities.
Judgement is applied in
formulating each of the
assumptions used in calculating
the retirement benefit asset.
This considers any adjustments
made to the key judgements to
ensure they remain appropriate
for the Group’s defined benefit
pension scheme.
The Company’s external actuary, Willis Towers Watson,
proposes the appropriate assumptions and calculates
the value of the retirement benefit asset. The Committee
considers the adjustments made by management to the
core assumptions proposed by the actuary. The Committee
also considers the audit work performed by Deloitte LLP
on the assumptions and to what extent the assumptions
are within the suitable ranges of assumptions based on
audit experience.
Compliance statement
The Group has fully complied with the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of
Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 throughout the 2023 financial year.
Paul Hewitt
Audit Committee Chairman
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
84
Governance
Risk Committee Report
Role of the Committee
The Committee’s role is to ensure that there is an
appropriate Risk Management Framework that operates
across the Group to facilitate effective oversight of the
Group’s principal risks and its aggregated risk position;
and to provide advice to the Board in relation to the
Group’s current and potential future risk strategies
and exposures. The Committee’s principal areas of
responsibility are as follows:
– understanding the Board’s strategy, desired culture and
direction and identifying the key strategic and emerging risks
which might prevent delivery;
– endorsing an overall risk appetite and recommending it to the
Board for approval at least annually;
– carrying out an assessment of the principal risks facing
the Group;
– monitoring the overall effectiveness of risk management
across the Group as overseen by the CRO;
– in conjunction with the Audit Committee, reviewing the
Group’s capability to identify and manage new risk types, and
keeping under review the effectiveness of the Group’s internal
control and risk management systems;
– reviewing the Group’s management of current and
forward-looking risk exposures;
– notifying the Board of any changes in the status and control
of material risks;
– reviewing the Group’s management of anti-money
laundering, data protection and operational resilience; and
– reviewing and approving the Group’s ICAAP, ILAAP and Group
liquidity assessment, including the stress testing and capital
allocation approach.
Allocation of time chart
Angela Knight
Risk Committee Chair
Balanced risk management
to support strategic progress
Dear Shareholder,
Welcome to the Risk Committee Report for the year ended
31 December 2023. The Committee held six meetings in the
year, one of which was specifically focused on the ICAAP and
ILAAP. The Committee performs an annual effectiveness and
adherence review and has covered all the duties set out in its
Terms of Reference.
The Committee membership was expanded during the
year with Michele Greene joining us as a member from May
2023. I have remained as Chair and the other non-executive
director members are Elizabeth Chambers and Paul Hewitt,
who is also Chair of the Audit Committee. The biographies
of all our members, which also contain information about
their qualifications, are available on pages 54 to 56 and our
committee attendance is on page 70. I am also a member of
the Audit Committee and work with Paul Hewitt to coordinate
the work of both committees. The Group’s CEO, Board Chair,
CFO, Chief Internal Auditor and General Counsel also regularly
attend Risk Committee meetings.
With the exception of the ICAAP and ILAAP focused meeting,
at each regular meeting the Committee has:
– reviewed and assessed the overall risk management
status of the Group;
– reviewed and assessed the Group’s top of mind risks,
both current and emerging, and key risk priorities;
– reviewed and assessed the Group’s principal risks;
– reviewed and confirmed the risk appetite status across the
Group; and
– reviewed the minutes and actions from previous meetings.
Our Committee reporting is structured consistently to facilitate
effective use of time within meetings. The Committee regularly
considers the Chief Risk Officer’s (CRO’s) report which provides
information regarding the top of mind risks (top-down
strategic and emerging risks), the principal risks (bottom-
up all-encompassing risks), a summary of risk events and a
functional update, and reports the Group’s position against its
risk appetite. The CRO Report also informs the Committee of
the second line of defence’s oversight and challenge of first
line operations and the CRO provides an annual assessment
of the effectiveness of risk management.
The Committee receives a report from the Chief Conduct and
Compliance Officer which facilitates oversight of regulatory
matters including regulatory engagement, horizon scanning,
compliance monitoring outcomes and financial crime.
The Committee’s Terms of
Reference are available at:
www.vanquisbankinggroup.com
Top of mind, principal and
emerging risks
35%
Credit risk focus 10%
Risk appetite, framework,
policy and harmonisation
5%
Regulatory and prudential
risk reporting
20%
Risk management
effectiveness
6%
Governance and
external reporting
4%
Compliance and conduct 20%
“ In a year of change for the Group the
Committee has kept a close watch
ontheGroup’soverallriskprofileto
ensure that the Group’s strategic and
emerging risks are understood and
well managed.”
Angela Knight
Risk Committee Chair
Vanquis Banking Group plc Annual Report and Accounts 2023
85
Governance Financial statementsStrategic Report Shareholder information
Key areas of focus
Strategic performance risk
The Committee has overseen the risk-related impact of the
strategic review actions taken by management in October
2023 to return the Group to a path to sustainable, profitable
growth which has included product price increases, a
simplified operating model, increased outsourcing and
modifications to the IT investment plan. In response to
the associated increase in the principal risk of strategic
performance the Committee enhanced its oversight of this
area. The Committee commissioned project-specific risk
assessments that documented the Group’s risk position and
what actions were being taken by management to manage
risks, including overseeing the establishment of a project-
specific risk forum, a project risk register and bolstered
monitoring of key colleague and customer metrics.
Technology and information security risk
The Committee has overseen the delivery of the risk-related
aspects of the Group’s IT infrastructure transformation
including overseeing the adaptations of plans following the
strategic review initiated in October 2023.
The Committee has played a key role in challenging
management to ensure it has identified, considered and
addressed the risks presented by the IT change programme.
Given the continued importance of the IT programme to
the Group’s overall risk profile the Committee has received
a report regarding the IT strategy, transformation and
associated risk management activity at each regular
meeting. The Committee provides guidance and approval
to management regarding risk management and IT security
on legacy systems. You can read more about the Group’s
strategy and digital, tech, data and analytics objectives and
focus for 2024 on page 9.
Capital, funding and liquidity risk
Detailed methodological reviews were completed on our
regulatory documents during 2021 (ICAAP) and 2022 (ILAAP).
Building on these solid foundations, the documents have been
further refined this year.
The ICAAP has been revised to reflect our continuous
development of capabilities and to incorporate feedback
received from the PRA as part of its Capital Supervisory Review
and Evaluation Process (C-SREP).
The ILAAP document reflects the consolidated Group’s liquidity
risk drivers and stress testing and the behaviours of the
Group’s products through 2023.
Both documents were approved by the Committee, for onward
recommendation to the Board, in December 2023.
You can read more about liquidity, funding and capital in the
Financial Review on page 34.
People and operational risk
The Committee recognised the people and operational risks
arising from the Group’s review of operations and subsequent
decision to outsource part of its operations to South Africa. The
Committee oversaw the activity through its receipt of regular
updates regarding the risk impacts and any associated action
plans documented via the CRO Report. You can read more
about the Group’s outsourcing project in our principal decision
on page 65.
Credit risk
In response to the continued uncertainty in the
macroeconomic environment the Committee has continued
with its enhanced approach to monitoring the impact of rising
interest rates and financial pressures on our customers during
the year. The Committee has received frequent and detailed
credit risk reports from the Chief Credit Officer regarding
portfolio performance, stability and customer behaviours.
Consumer Duty
The Committee has received regular updates from
management enabling it to oversee the execution of the
Consumer Duty implementation plan. The Committee
completed a deep dive review of fair value and has overseen
the actions arising such as the review of fees and charges and
terms and conditions. The Committee will continue to monitor
the impact of changes on customer outcomes.
Risk and control maturity
The Committee has overseen the Risk Harmonisation
programme and also the First Line Control Review (FLCR)
Programme. I am pleased to report both completed
in December 2023. The programmes have delivered
tangible improvements to our risk and control maturity
including a single Enterprise Risk Management Framework
and risk management system allowing for consistent
and consolidated risk reporting by our centralised Risk
function. The completion of both programmes has resulted
in a more accurate view of the Group’s operational risk
profile and the Committee has benefited from simplified,
aggregated reporting and insight capability. The Committee
commissioned an independent external quality assessment
to support the Committee’s responsibility to oversee the
effectiveness of the Group’s risk management strategy,
governance arrangements and operating model in managing
risk. The assessment concluded that the Group’s Risk
Management Framework and processes are fully embedded
and value adding.
The Committee recognises that the Risk Harmonisation
programme has also supported the first line of defence
ownership of risks through Risk and Control Self-Assessment
(RCSA); however, this is an iterative process and more risk
education for first line colleagues is planned for 2024.
Risk appetite
The Committee has overseen the Group’s Risk Appetite
Framework and receives comprehensive risk appetite data
with detailed plans regarding any route-to-green activity for
metrics that are not within appetite.
Principal and emerging risks
The Committee is responsible for supporting the Board in its
robust assessment of the principal and emerging risks to the
Group. The CRO reports to each regular meeting on the top of
mind principal and emerging risks. The Committee considers
the top of mind and any other risks that may impact the
Group’s strategy and operations and assesses its aggregated
risk profile. Alongside the CRO Report being provided to
the Board, I also provide the Board with a verbal update of
matters considered by the Risk Committee at each following
Board meeting.
In July 2023 the Committee approved the Group’s Risk
Management Framework, including the Emerging Risks
Methodology, which defines the approach to identify, assess
and measure the principal and emerging risks. The risk
classification was reviewed and approved by the Committee
in November 2023.
You can read more about the Group’s approach to risk
management in our Strategic Report on pages 44 to 46.
A description of our principal risks and how they are being
managed can be found on pages 46 to 50.
Vanquis Banking Group plc Annual Report and Accounts 2023
86
Governance
Committee review of internal risk
management and controls
In accordance with the 2018 UK Corporate Governance
Code Principle O, the Board has a responsibility to establish
procedures to manage risk, oversee the internal control
framework, and determine the nature and extent of the
principal risks the Company is willing to take in order
to achieve its long-term strategic objectives. Provision
29 requires the Board to monitor the Company’s risk
management and internal control systems.
Following a detailed review by the Committee, the directors
can confirm that the Group’s key risks have been robustly
assessed and are effectively controlled. In reaching this
conclusion, the Risk Committee assessed the following criteria:
– a comparison between the Group’s net risk profile and
positioning on both 1 January 2023 and 2024;
– management of top of mind risks including credit risk
related to the cost-of-living crisis, strategic performance
risk, technology and change;
– performance of the Risk function against its objectives as
agreed and assessed by the Remuneration Committee;
– the effectiveness of the Risk Management Framework to
ensure consistent management of risks;
– key strategic decisions taken and executed in 2023 which
alter the risk profile of the Group, including the change
in structure and leadership of the Group and the strategy;
– an assessment of our relationships with our
regulators; and
– other key indicators such as the reduction in open and
overdue audit actions, engagement with risk awareness
activities and risk awareness within first line management.
Opportunities
Looking forward, our refreshed strategy determines that
we will continue to monitor closely strategic performance
risk and credit risk and the stability of our overall risk profile
throughout 2024.
The Committee appreciates that the embedding of a
risk-aware culture is a continual and iterative process. With
this in mind, the Committee priorities to preserve and enhance
the Group’s control environment during 2024 are set out in the
table below.
Angela Knight
Risk Committee Chair
26 March 2024
Key Committee activities in 2023 Committee
priorities in 2024
– Closely monitored the Group’s ‘top of mind’ risks and received regular Group CRO reports outlining the Group’s
strategic and emerging risks.
– Oversaw the completion of the Risk Harmonisation programme, including embedding of the Group-wide risk
system, Riskonnect, and the completion of the Group’s First Line Control Review programme and requested and
received an External Quality Assessment of Risk Management Maturity by an independent consultant.
– Performed enhanced monitoring of credit risk in light of changes to the macroeconomic environment and the
strategic review.
– Confirmed the effectiveness of the Group Risk Management Framework following an internal review
by management.
– Oversaw the execution of the Group’s Consumer Duty of Care implementation plan.
– Oversaw the IT strategic transformation as it pertained to risk management and the delivery of controls in the
IT infrastructure and monitored IT resilience Including the performance of information security testing and resulting
action plans from the Group’s Chief Information Security Officer (CISO).
– Monitored execution risk associated with the strategic and operational change activity, particularly the cost
reduction programme, strategic review and organisational design.
– Received the Group MLRO Report detailing divisional performance, money laundering systems and controls, key
financial crime risks and issues, control gaps and associated action plans.
– Received regular reports from the Chief Conduct and Compliance Officer covering compliance and data
protection.
– Approved the Group’s ILAAP, ICAAP and Pillar 3 Disclosures.
– Approved the Committee’s revised terms of reference (ToR) and forward agenda planner and the Committee’s
effectiveness review.
– Strategy and
impact on principal
and emerging risks.
– Review of the
risk appetite
framework.
– Overseeing the risk
assessment of any
new products.
– Model
development and
model validation
results.
– Credit risk
management
capability.
Risk Committee Report continued
Vanquis Banking Group plc Annual Report and Accounts 2023
87
Governance Financial statementsStrategic Report Shareholder information
Directors’ Report
Our responsibilities
as a listed business
In accordance with section 414C(11) of the Companies Act
2006, the directors present their report for the year ended
31 December 2023. Information relevant to the Directors’ Report
that has been covered in the Strategic Report has been listed
below alongside its location. Both the Strategic Report and
the Directors’ Report have been prepared and presented in
accordance with, and in reliance upon, applicable company
law. The liabilities of the directors in connection with both the
Directors’ Report and the Strategic Report shall be subject to
the limitations and restrictions provided by company law.
Other statutory information
(including that required by Listing Rule
9.8.4R)
Agreements with controlling shareholders Not applicable
Contracts of significance 185
Details of long-term incentive schemes 104 to 105
Directors’ indemnities 88
Dividends 89
Engagement with employees 63
How we had regard to suppliers, customers and
others in a business relationship with the Group
62 to 66
Events post-balance sheet 187
Risk management including principal risks 44 to 50
Future business developments 6 to 13
Going concern and viability statement 51 and 129
Greenhouse gas emissions,
energy consumption and efficiency
27
Interest capitalised Not applicable
Non-pre-emptive issues of equity for cash in
relation to major subsidiary undertakings
Not applicable
Non-pre-emptive issues of equity for cash Not applicable
No political donations 91
Parent participation in a placing
by a listed subsidiary
Not applicable
Provision of services by a controlling shareholder Not applicable
Publication of unaudited financial information 4
Purchase of own shares Not applicable
Research and development 91 and 163
Share capital – structure, voting and
other rights
88
Share capital – employee share plan
voting rights
88
Shareholder waivers of dividends 89
Shareholder waivers of future dividends 89
Waiver of emoluments by a director 104
Waiver of future emoluments by a director 104
Articles of association
The directors’ powers are conferred on them by UK legislation
and by the articles of association. Changes to the articles of
association must be approved by shareholders passing a special
resolution and must comply with the provisions of the Companies
Act and the FCA’s Disclosure Guidance and Transparency Rules.
Corporate governance statement
The Board considers that the Company was fully compliant with
all the provisions of the 2018 UK Corporate Governance Code
(the Code) throughout 2023.
The Group’s Corporate Governance Report is set out on pages
52 to 92.
In relation to the 2024 financial year to-date, following the
stepping down of Andrea Blance from the Board on 1 February
2024, the Audit Committee and Remuneration Committee
membership became non-compliant with Provisions 24 and
32 of the Code, with only two members in place for each
committee. On considering Andrea’s decision to step down, the
Nomination Committee and Board considered the membership
of both committees and the prospective non-compliance with
the Code and agreed that this temporary non-compliance
was appropriate for the Company in view of the following
circumstances: (a) the non-compliance with the Code was
expected to be for a short time due to progress being made
in relation to non-executive director appointments, and would
only impact a very limited number of meetings of each of the
committees, and (b) given that both committees continued
to have sufficient skills and experience to undertake their roles
effectively. Additionally, at the time of the non-compliance,
and since September 2023, the Company has been outside of
the FTSE 350. The Code notes that the Audit and Remuneration
Committees of a smaller company, being one that is below the
FTSE 350 throughout the year immediately prior to the reporting
year, can be comprised of two members. On 26 March 2024,
the Board approved the appointments of three new non-
executive directors with effect from 27 March 2024, with the Audit
and Remuneration Committees comprising of four and three
members respectively from that point. The Group will therefore
only be non-compliant with Provisions 24 and 32 between 1
February 2024 and 27 March 2024, during which time there was
only one Remuneration Committee meeting and two Audit
Committee meetings. We will provide an explanation regarding
compliance with the Code during 2024 in our 2024 Annual Report
to be published in 2025.
Directors
The membership of the Board and biographical details of the
directors at the year end are given on pages 54 to 56 and are
incorporated into this report by reference. Commentary about the
Board’s composition and Board tenure can be found on page 70.
All directors were present throughout 2023 and up to the date
of signing the Annual Report and Financial Statements 2023,
other than:
– Michele Greene who joined the Board on 9 March 2023;
– Sir Peter Estlin who joined the Board on 19 April 2023;
– Ian McLaughlin who joined the Board on 1 August 2023;
– Dave Watts who joined the Board on 1 November 2023; and
– Malcolm Le May, Neeraj Kapur, Patrick Snowball and
Andrea Blance who stepped down from the Board on
1 August 2023, 7 August 2023, 15 September 2023 and 1
February 2024 respectively.
Vanquis Banking Group plc Annual Report and Accounts 2023
88
Governance
Directors’ Report continued
Appointment and replacement of directors
Rules about the appointment and replacement of directors are
set out in the Company’s articles of association. In accordance
with the recommendations of the Code, all directors with the
exception of Elizabeth Chambers and Margot James will offer
themselves for appointment or reappointment, as appropriate,
at the 2024 AGM.
Directors’ indemnities
The articles of association permit the Company to indemnify
directors of the Company (or of any associated company)
in accordance with section 234 of the Companies Act.
The Company may fund expenditure incurred by directors
in defending proceedings against them. If such funding is
by means of a loan, the director must repay the loan to the
Company, if they are convicted in any criminal proceedings
or judgment is given against them in any civil proceedings.
The Company may indemnify any director of the Company
or of any associated company against any liability.
However, the Company may not provide an indemnity against:
1. any liability incurred by the director to the Company
or to any associated company;
2. any liability incurred by the director to pay a criminal
or regulatory penalty;
3. any liability incurred by the director in defending criminal
proceedings in which they are convicted;
4. any liability incurred by the director in defending any civil
proceedings brought by the Company (or an associated
company) in which judgment is given against them; or
5. in connection with certain court applications under
the Companies Act, no indemnity was provided and no
payments pursuant to these provisions were made in 2023
or at any time up to the date of this report.
There were no other qualifying indemnities in place during
this period. The Company maintains both a deed of indemnity
in favour of the directors and directors’ and officers’ liability
insurance which gives appropriate cover for any legal action
brought against its directors.
Directors’ powers
Subject to the articles of association, UK legislation and any
directions given by special resolution, the business of the Company
is managed by the Board. The directors currently have powers in
relation to the issuing and buying back of the Company’s shares,
which were granted by shareholders at the 2023 AGM. The Board
is seeking renewal of these powers at the 2024 AGM.
Conflicts of interest
The Companies Act and the articles of association require the
Board to consider any potential conflicts of interest of its members.
The Board has a formal policy and operates formal procedures
regarding conflicts of interest in order to identify and manage
conflicts and to maintain independent judgement. All members
of the Board have completed conflict of interest forms which are
reviewed annually. All directors have an ongoing duty to notify
the Company of any changes and to ensure that appropriate
authorisation is sought where required and are required to
renew and confirm their external interests annually. The Board
(excluding the director concerned) considers and, if appropriate,
authorises each director’s reported actual and potential conflict
of interest, taking into consideration what is in the best interests
of the Company and whether the director’s ability to act in
accordance with his or her duties is affected. The Board will refer
to the Conflict of Interest Policy for the most appropriate mitigating
control. Records and Board minutes of all authorisations granted
by the Board and the scope of any approvals given are held and
maintained by the Company Secretary.
Share capital
The Company’s issued ordinary share capital comprises a
single class of ordinary shares. The rights attached to the
ordinary shares are set out in the articles of association. Each
share carries the right to one vote at general meetings of
the Company. No new shares were issued to satisfy awards
made under the Long Term Incentive Scheme 2015 (LTIS),
the Restricted Share Plan (RSP) or Deferred Bonus Plan (DBP).
54,638 shares were issued during the year to satisfy exercises
of options under the Vanquis Banking Group Savings-Related
Share Option Scheme 2013. 2,588,253 shares were issued
during 2023 pursuant to the acquisition of Usnoop Ltd.
Rights of ordinary shares
All of the Company’s issued ordinary shares are fully paid
up and rank equally in all respects and there are no special
rights with regard to control of the Company. The rights
attached to them, in addition to those conferred on their
holders by law, are set out in the articles of association. There
are no restrictions on the transfer of ordinary shares or on the
exercise of voting rights attached to them, except:
1. where the Company has exercised its right to suspend
its voting rights or to prohibit their transfer following the
omission by their holder or any person interested in them
to provide the Company with information requested by it in
accordance with Part 22 of the Companies Act; or
2. where their holder is precluded from exercising voting
rights by the FCA’s Listing Rules or the City Code on
Takeovers and Mergers.
Directors’ interests in shares
The below interests include those held by connected persons
and interests in shares through the Company’s share schemes.
Number of shares
31 December
2023
31 December
2022
Ian McLaughlin
1
1,028,939 —
Dave Watts
2
40,000 —
Sir Peter Estlin
3
100,000 —
Andrea Blance
4
— —
Elizabeth Chambers 12,000 12,000
Paul Hewitt 34,205 34,205
Margot James — —
Angela Knight — —
Graham Lindsay 26,464 9,771
Michele Greene
5
— —
1 Ian McLaughlin joined the Board on 1 August 2023.
2 Dave Watts joined the Board on 1 November 2023.
3 Sir Peter Estlin joined the Board on 19 April 2023. Shareholding includes
50,000 shares held by a connected person.
4 Andrea Blance stepped down from the Board on 1 February 2024.
5 Michele Greene joined the Board on 9 March 2023.
Between 31 December 2023 and 14 March 2024, being the
latest practicable date prior to publication, there have been
no changes to the directors’ interests.
Dividend waiver
Information on dividend waivers currently in place can be
found on page 89.
Vanquis Banking Group plc Annual Report and Accounts 2023
89
Governance Financial statementsStrategic Report Shareholder information
Profit and dividends
The continuing operations profit before taxation, amortisation
of acquisition intangibles and exceptional items amounts to
£24.9m (2022: profit of £126.6m). As at the date of this report,
the directors have declared dividends as follows:
Ordinary shares (p per share)
Interim dividend
2023 (paid on 21 September 2023) 5p
2022 (paid on 22 September 2022) 5p
Proposed final dividend
2023 (proposed to be paid on 30 May 2024) 1p
2022 (paid on 7 June 2023) 10.3p
Total ordinary dividend
2023 6p
2022 15.3p
All-employee share schemes
The current schemes for employees resident in the UK are the
Vanquis Banking Group Savings-Related Share Option Scheme
2022 (SAYE) and the Vanquis Banking Group Share Incentive Plan
2022 (SIP). Share schemes are a long-established and successful
part of the total reward package offered by the Company,
encouraging and supporting employee share ownership. The
Company’s schemes aim to encourage employees’ involvement
and interest in the financial performance
and success of the Group
through share ownership. The Company’s
SIP offers employees the
opportunity to further invest in the Company and to benefit from
the Company’s offer to match that investment on the basis of one
matching share for every four partnership shares purchased.
Scheme title
Total participants as at
31 December 2023
Total participants as at
31 December 2022
SAYE 439 528
SIP 106 147
Executive share incentive schemes
Awards are also outstanding under the RSP, LTIS and DBP. DBP
awards were granted during the year on 11 April 2023. RSP and
CSOP options were granted under the RSP on 11 April 2023 and
8 September 2023. LTIS awards were granted during the year
on 8 September 2023. Further information is set out on page 104.
Vanquis Banking Group 2007 Employee Benefit Trust (EBT)
The EBT, a discretionary trust for the benefit of executive
directors and employees, was established in 2007. The trustee,
SG Kleinwort Hambros Trust (CI) Limited, is not a subsidiary of
the Company. The EBT operates in conjunction with the LTIS,
RSP, RBA and DBP and either purchases shares in the market
or subscribes for the issue of new shares. The EBT is funded
by loans from the Company which are then used to acquire,
either via market purchase or subscription, ordinary shares to
satisfy awards granted under the LTIS, RSP and DBP. Funds are
used to acquire shares by way of market purchase for the RBA.
For the purpose of the financial statements, the EBT is
consolidated into the Company and Group. As a consequence,
the loans are eliminated and the cost of the shares acquired is
deducted from equity as set out in note 31 on page 181 of the
financial statements. In 2023, the EBT agreed to satisfy awards
granted during the year under the RSP and CSOP options under
the RSP in relation to 4,593,575 shares in the Company. During
the year the EBT also agreed to satisfy awards granted during
the year under the LTIS in relation to 2,821,336 shares and
granted during the year under the DBP in relation to 315,661
shares. In 2023, the EBT also agreed to satisfy awards under
the RBA of 38,053 shares in the Company by way of market
purchase in relation to 2023.
As at 31 December 2023, the EBT held the non-beneficial
interest in 1,869,980 shares in the Company (2022: 2,946,015).
The EBT may exercise or refrain from exercising any voting
rights in its absolute discretion and is not obliged to exercise
such voting rights in a manner requested by the beneficiaries.
The EBT waives its right to dividends in relation to shares held
in the trust.
Provident Financial Employee Benefit Trust
(the PF Trust)
The PF Trust, a discretionary trust for the benefit of executive
directors and employees, was established in 2003 and
operated in conjunction with the PSP. The trustee, Provident
Financial Trustees (Performance Share Plan) Limited, is
a subsidiary of the Company. The PF Trust has not been
operated with the Performance Share Plan since 2012, when
the previous PSP expired. As at 31 December 2023, the PF Trust
had no interest in any shares in the Company (2022: nil).
Substantial shareholdings
In accordance with the Disclosure Guidance and Transparency Rules (DTR 5), the Company had been notified that the
following persons hold directly or indirectly 3% or more of the voting rights of the Company:
Interests as at 31 December 2023
Holders (descending %)
Interests as at 14 March 2024 (being the latest
practicable date before publication of the report)
Holders (descending %)
Schroder Investment Management 13.89% Schroder Investment Management 13.84%
Redwood Capital Management 12.81% Redwood Capital Management 12.59%
Davidson Kempner Capital Management 9.71% Davidson Kempner Capital Management 9.70%
BlackRock 6.87% BlackRock 6.97%
Artemis Investment Management 6.27% Artemis Investment Management 6.83%
Premier Miton Investors 4.59% Goldman Sachs 5.17%
Janus Henderson Investors 4.35% Premier Miton Investors 4.59%
Vanguard Group 4.04% Vanguard Group 4.15%
Jupiter Asset Management 3.88% Janus Henderson Investors 4.02%
abrdn 3.87% abrdn 3.87%
Marathon Asset Management 3.05%
All interests disclosed to the Company in accordance with DTR 5 that have occurred since 14 March 2024 can be found on
the Group’s website: www.vanquisbankinggroup.com.
Vanquis Banking Group plc Annual Report and Accounts 2023
90
Governance
Directors’ Report continued
Vanquis Banking Group BAYE Trust
(the BAYE Trust)
The BAYE Trust is a discretionary trust which was established
in 2013 to operate in conjunction with the SIP. Equiniti Share
Plan Trustee is trustee of the BAYE Trust. It is not a subsidiary
of the Company. The BAYE Trust is funded by loans from the
Company which are then used to acquire ordinary shares
via market purchase to satisfy the Matching Awards for
participants of the SIP.
For the purposes of the financial statements, the BAYE Trust is
consolidated into the Company and Group. Participants in the
SIP can direct the trustee on how to exercise its voting rights
in respect of the shares it holds on behalf of the participant.
As at 31 December 2023, the BAYE Trust held the non-beneficial
interest in 240,294 shares (2022: 196,535 shares).
Colleague engagement and investing in
our workforce
We invest in our colleagues through recognition, reward,
development, wellbeing, the working environment and culture.
Colleagues are recognised through our ‘Way to Go’ recognition
platform and our ‘Perks at Work’ scheme, where you can
recognise colleagues for outstanding work, providing support
and generally exhibiting behaviours that show they are living
The Vanquis Way, the Group’s Values. You can also use the site
to learn new hobbies and skills through the Perks Community
Online Academy and save money on a wide range of expenses.
We have a Learning and Development hub which provides
colleagues with an online portal to enhance their skills,
performance and career.
We have a Group Reward Framework that enables clear
career progression and movement around the Group. We have
established mechanisms for colleague engagement including
having a Designated Non-Executive Colleague Champion.
Information relevant to how we invest in our colleagues and
where it can be found:
Information Location
Reward and recognition 94 and 110
Learning and development – management
programmes, apprenticeships, mandatory
e-learning and mentoring
14, 16, 63 and
90
Culture – equal opportunities, gender diversity,
other diversity and inclusion and Colleague
Survey results
Inside front
cover, 12, 16,
61 and 62
Health and wellbeing – support and initiatives 62
Engagement – internal communication, Colleague
Survey, Workforce Panels and Designated
Non-Executive Colleague Champion
16, 62, 63, 66,
67 and 90
Equal opportunities and diversity
The Group is committed to employment policies which follow
best practice, based on equal opportunities for all colleagues
irrespective of gender, pregnancy, race, colour, nationality,
ethnic or national origin, disability, sexual orientation, age,
marital or civil partner status, gender reassignment, religion
or belief. The Group gives full and fair consideration to
applications for employment from disabled persons, having
regard to their aptitudes and abilities.
We have signed up to the Government’s Disability Confident
Scheme for employers, our first of three steps on our Disability
Confident journey, which will help us to recruit, retain and
develop disabled colleagues.
Appropriate arrangements are made for the continued
employment and training, career development and promotion
of disabled persons employed by the Group including making
reasonable adjustments where required. If a member of staff
becomes disabled, every effort is made by the Group to ensure
their continued employment, either in the same or an alternative
position, with appropriate retraining being given if necessary.
Pensions
The Group operates two pension schemes in the UK. Employee
involvement in the Group defined benefit pension scheme is
achieved by the appointment of member-nominated trustees
and by regular newsletters and communications from the
trustees to members. In addition, there is a website dedicated to
pension matters. The trustees manage the assets of the defined
benefit pension scheme which are held under trust separately
from the assets of the Group. Each trustee is encouraged to
undertake training and regular training sessions on current
issues are carried out at meetings of the trustees by the trustees’
advisors. The trustees have a business plan and, at the start of
each year, review performance against the plan and objectives
from the previous year. In addition, they agree objectives and
a budget for the current year. The trustees have a risk register
and an associated action plan and a Conflicts of Interest Policy,
both of which are reviewed at least annually. The trustees have
implemented a de-risking investment strategy which has been
agreed with the Company and is kept under close review. The
objective of the strategy is to reduce the risk that the assets
would be insufficient in the future to meet the liabilities of the
scheme. The Company has put Pension Trustee Indemnity
Insurance in place to cover all the Group’s pension schemes
where individuals act as trustees. The trustees are also protected
by an indemnity within each scheme’s rules and this insurance
effectively protects the Group against the cost of potential
claims impacting on the solvency of the pension schemes. The
Group operates a Group Personal Pension Plan for employees
who joined the Group from 1 January 2003 and a Group
Personal Pension Plan for employees of Moneybarn who joined
the Group from 1 January 2003. Employees in both these plans
have access to websites which provide information about their
funds and general information about the plans.
Compliance
The Risk and Audit Committees oversee compliance and work
together to review the systems and controls for the prevention
of bribery.
Health and safety
The Group is committed to having a positive health and safety
culture and an integrated, embedded, and effective health
and safety management system. During 2023, the development
of Group-wide health and safety policies was finalised, with
a new approach to performance monitoring and evaluation
introduced, to review the effectiveness of the management
system. H&S toolkit training was developed to better equip
management with critical knowledge and resources, to ensure
health and safety is embedded in what they do. Focusing on
continual improvement has been an essential component of
the health and safety strategy. Accident and reporting statistics
remain a key performance indicator and area of focus. During
the year there were no RIDDOR reportable events.
Anti-bribery and corruption
The Group has a policy on anti-bribery and corruption which
reflects the requirements of the Bribery Act 2010.
The Policy sets out the Group’s zero-tolerance approach to bribery
and corruption and its commitment to acting professionally, fairly
and with integrity in all its business dealings and relationships,
wherever it operates, and implementing and enforcing effective
systems and controls to counter bribery and corruption. The Policy
Vanquis Banking Group plc Annual Report and Accounts 2023
91
Governance Financial statementsStrategic Report Shareholder information
applies to all employees, contractors and directors in relation to
the business activities undertaken by, or on behalf of, the Group.
It also applies to any third party which is undertaking business
for or on behalf of the Group, which must comply with the Policy or
maintain equivalent standards and safeguards to prevent bribery
and corruption. Under the Policy, all employees, contractors,
directors and relevant third parties of the Group and its divisions
must comply with the following minimum requirements:
– they must not directly or indirectly engage in bribery or
corruption in any form; and
– they also must not accept, solicit, agree to receive, promise,
offer or give a bribe, or facilitate payment, kickback or other
improper payment.
The Policy also states that if an employee, contractor, director or
relevant third party of the Group or its divisions becomes aware
of a breach of the above minimum requirements they must
immediately comply with applicable reporting protocols and
procedures. The Group MLRO is the responsible person within
the Group for receiving reports, and, as soon as is reasonably
practicable, reports the incident to the Deputy Company
Secretary. The Group provides anti-bribery and corruption
training to all colleagues.
Related policies
Gifts and Corporate Hospitality Policy
The Group has a Corporate Hospitality Policy which sets
out the Group’s requirements for the review, approval and
documentation of any gifts or corporate hospitality which are
accepted, offered or provided. The Risk Committee oversees
the Gifts and Corporate Hospitality Policy.
Whistleblowing Policy
The Group has a Whistleblowing Policy which is overseen
by the Board. The Group is committed to fostering a culture
of openness, honesty and accountability and requires the
highest possible standards of professional and ethical conduct.
Should any Group colleagues have any reportable concerns,
these can be raised anonymously either internally or through
the Group’s external third-party helpline facility as detailed in
the Group Whistleblowing Policy. The Group has appointed a
Whistleblowing Champion, being a non-executive director with
responsibility for ensuring and overseeing the integrity of the
Group’s arrangements on whistleblowing, including policies and
procedures. A Group Whistleblowing Forum is in place which
reviews management information on whistleblowing disclosures
and grievances and agrees on escalations to the Board. It also
considers any concerns regarding persistent trends and shares
best practice. The Group provides whistleblowing training
to all colleagues, including executive directors.
Overseas branches
The Group has no overseas branches.
Political donations
The Group made no political donations nor incurred any
political expenditure during the year.
Research and development
The Group’s research and development activities have
predominantly related to systems and applications for the
credit cards and personal loans businesses as set out in
Note 20 on page 163 of the financial statements.
Environment and greenhouse gas emissions
The Group’s greenhouse gas (GHG) and energy use reporting
is undertaken in accordance with our obligations under both
The Companies Act 2006 (Strategic Report and Directors’
Report) Regulations 2013 and the UK Government’s Streamlined
Energy and Carbon Reporting (SECR) policy that has been
implemented through the Companies (Directors’ Report)
and Limited Liability Partnership (Energy and Carbon Report)
Regulations 2018. These emissions are reported in accordance
with WRI/WBCSD GHG Protocol. For more information, please
refer to pages 19 to 28.
The Group’s total GHG emissions, in tonnes of CO
2
equivalent
(CO
2
e), along with details of our energy use and an intensity ratio,
are reported in the table on page 27. SLR Consulting Limited has
provided limited level ISAE 3000 (Revised) assurance in respect
of this data. Its full, independent assurance statement is available
online at: www.vanquisbankinggroup.com/sustainability. Where
challenges have occurred in obtaining data, estimates have
been used and assured by SLR Consulting.
The Group’s Climate Risk Committee, which is chaired by
Gareth Cronin, the Group Chief Risk Officer, and includes
senior representatives from functions such as Finance, Risk,
Operations and Sustainability, continues to support the business
to assess, manage and report material climate-related risks
and opportunities, and ensure that we continue to meet the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD). Details on the progress the Group has made
during 2023 in meeting the TCFD recommendations are set out
on pages 19 to 28. As at 31 December 2023, the Group’s Carbon
Disclosure Project (CDP) rating was B- (2022: B-) for our climate
change risk management efforts throughout the year. To help us
to manage and reduce our wider impacts on the environment
the Group continues to have in place an environmental
management system (EMS). Our EMS helps us to identify, assess
and reduce key environmental risks and impacts; set and deliver
against environmental targets; and ensure our legal compliance.
This EMS is independently audited each year against the
requirements of the international management standard ISO
14001:2015. Following the environmental audits carried out in 2023,
all the Group’s business premises in Bradford, London, Chatham
in Kent and Petersfield in Hampshire were re-certified to comply
with the international standard ISO 14001:2015.
Important events since the end of the
financial year (31 December 2023)
See Note 36 on page 187.
Financial instruments
Details of the financial risk management objectives and
policies of the Group and the exposure of the Group to credit
risk, liquidity risk and market risk are included on pages 136 to
140 of the financial statements.
Significant agreements
There are no agreements between any Group company and
any of its employees or any director of any Group company
which provide for compensation to be paid to an employee or
a director on termination of employment or for loss of office as
a consequence of a takeover of the Company.
Directors’ responsibilities
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
The directors have also chosen to prepare the parent company
financial statements under United Kingdom adopted International
Accounting Standards. Under company law the directors must
not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period.
Vanquis Banking Group plc Annual Report and Accounts 2023
92
Governance
Directors’ responsibilities continued
In preparing these financial statements, International
Accounting Standard 1 requires that directors:
– properly select and apply accounting policies;
– present information, including accounting policies,
in a manner that provides relevant, reliable, comparable
and understandable information;
– provide additional disclosures when compliance with the
specific requirements of the financial reporting framework
are insufficient to enable users to understand the impact of
particular transactions, other events and conditions on the
entity’s financial position and financial performance; and
– make an assessment of the Company’s ability to continue
as a going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ responsibility statement
We confirm that to the best of our knowledge:
– the financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole;
– the Strategic Report includes a fair review of the development
and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face; and
– the Annual Report and Financial Statements, taken as a
whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess
the Company’s position, performance, business model
and strategy.
The directors are also required by the FCA’s Disclosure Guidance
and Transparency Rules (DTR) to include a management report
containing a fair review of the business of the Group and the
Company and a description of the principal risks, emerging risks
and uncertainties facing the Group and Company.
The Directors’ Report and the Strategic Report constitute
the management report for the purposes of DTR 4.1.5R and
DTR 4.1.8R. The directors are responsible for keeping proper
accounting records that are sufficient to:
– show and explain the Company’s transactions;
– disclose with reasonable accuracy at any time the
financial position of the Company and Group; and
– enable them to ensure that the financial statements and
the Directors’ Remuneration Report comply with the Act
and, as regards the Group financial statements, Article
4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and the Group
and taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Annual Report and Financial Statements 2023 will be
published on the Group’s website in addition to the normal
paper version.
The directors are responsible for the maintenance and integrity
of the Group’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement
Company law requires the directors to prepare financial
statements for each financial year. Under that law the
directors are required to prepare the Group financial
statements in accordance with relevant IFRS, IFRIC
interpretations and the Companies Act 2006.
The directors who held office during the financial year and to
the date of this report were as follows:
Sir Peter Estlin Chair
Ian McLaughlin Chief Executive Officer
Dave Watts Chief Financial Officer
Angela Knight Senior Independent Director
Elizabeth Chambers Independent non-executive director
Margot James Independent non-executive director
Paul Hewitt Independent non-executive director
Graham Lindsay Independent non-executive director
Michele Greene Independent non-executive director
Disclosure of information to auditor
In accordance with section 418 of the Act, each person who is
a director as at the date of this report confirms that:
– so far as they are aware, there is no relevant audit
information of which the Company’s external auditor is
unaware; and
– they have taken all steps that ought to have been taken
as a director in order to make themselves aware of any
relevant audit information and to establish that the
Company’s external auditor is aware of that information.
Auditor
Deloitte LLP, the external auditor for the Company, was first
appointed in 2012 and, following a tender process in 2020,
a resolution proposing its reappointment was passed at
the 2023 AGM. The reappointment of Deloitte LLP as the
Company’s external auditor is proposed at the 2024 AGM.
2024 AGM
The 2024 AGM will be held at the offices of Clifford Chance
LLP, 10 Upper Bank Street, Canary Wharf, London, E14 5JJ on
15 May 2024 at 3.30pm. The Notice of AGM, together with an
explanation of the items of business, will be contained in the
circular to shareholders dated 27 March 2024 and will be
available on our website, www.vanquisbankinggroup.com.
Approved by the Board on 26 March 2024 and signed by order
of the Board.
Melanie Barnett
General Counsel and Company Secretary
26 March 2024
Directors’ Report continued
Vanquis Banking Group plc Annual Report and Accounts 2023
93
Governance Financial statementsStrategic Report Shareholder information
Directors’ Remuneration Report
Annual Statement by the Chair of the Remuneration Committee
Dear Shareholder
On behalf of the Remuneration Committee (the Committee),
I am delighted to present my first Directors’ Remuneration
Report for the year ended 31 December 2023, having
succeeded Andrea Blance in September 2023. I would like
to extend my sincere thanks to Andrea for her considerable
contribution to remuneration policies and practices at
Vanquis Banking Group. Andrea guided the Committee
with skill and determination through a period of significant
transformation for the Group. I have been a member of
the Committee since April 2019, having previously been the
Chair of the Customer, Culture and Ethics (CCE) Committee,
which has helped to facilitate a smooth handover in
our responsibilities.
The report sets out how the Committee carried out its
responsibilities during the year and our approach to
remuneration in 2023 and explains the rationale for our
decision making.
2023 Group performance
2023 was an exceptionally challenging year for the Group,
which included significant change at Board level in a relatively
short period of time and new appointments of executive
directors and the Chairman.
Our mid-year financial results, which were communicated to
shareholders on the final day of active service for the previous
CEO (Malcolm Le May), were below market expectations which
led to a significant fall in share price. Under the leadership of
the new CEO (Ian McLaughlin), the executive team worked at
pace in the second part of the year to undertake a detailed
operating review of the Group and scrutinised every cost centre
and product line. As a result, the Group reduced the cost base
and clarified expectations for the year-end financial results. A
full strategy review was commissioned and the outputs of this
will enable the Group to become the outstanding customer
champion in its target market segment and deliver sustainable,
profitable growth based on the Group’s deep understanding of,
and commitment to, the customer base.
Our financial performance stabilised at the end of the year
but was below the thresholds set at the beginning of the year,
reflected in:
– adjusted profit before tax (Adjusted PBT) of £24.9m
(£126.6m in 2022); and
– adjusted return on required equity (RORE) of 4.0%
(22.2% in 2022).
Committee members (attendance)
Graham Lindsay
(Chair from 1 September 2023) (4/4 plus 6/6 ad hoc)
Andrea Blance
(Chair until 1 September 2023) (4/4 plus 6/6 ad hoc)
(Stepped down 1 February 2024)
Margot James (4/4 plus 6/6 ad hoc)
Sir Peter Estlin
(19 April 2023 to 15 September 2023) (1/1 plus 3/3 ad hoc)
Role of the Committee
The Chairman, the Group Chief Executive Officer (CEO),
the Chief People Officer (CPO), the Group Head of
Reward and the Committee’s independent advisor
(PwC) attend Committee meetings by invitation. No
person is in attendance when their own remuneration is
being discussed.
The report complies with the provisions of the Companies
Act, the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 and the
Listing Rules of the FCA. The Company also follows the
requirements of the UK Corporate Governance Code (the
Code) updated in July 2018.
Allocation of time
Remuneration
Governance 36%
Annual bonus 23%
Share Plans 18%
Risk 23%
The Committee’s Terms of
Reference are available at:
www.vanquisbankinggroup.com
Graham Lindsay
Remuneration Committee Chair
“ In 2023 the Committee has focused
on setting executive remuneration
within the context of the overall
Company performance.”
Graham Lindsay
Remuneration Committee Chair
Vanquis Banking Group plc Annual Report and Accounts 2023
94
Governance
Directors’ Remuneration Report continued
Annual Statement by the Chair of the Remuneration Committee continued
Key remuneration outcomes
Given the 2023 financial results of the Group, the focus of
the Committee was to ensure that this was appropriately
reflected in the remuneration decisions made and outcomes
were aligned to the wider stakeholder experience.
As a result, the Committee has exercised its discretion in
relation to:
– 2023 Group bonus pool. Downward adjustment on the
annual bonus scorecard outcomes to zero, resulting in
no bonus for all colleagues, including the current and
previous executive directors.
– Restricted Share Plan (RSP) 2020 award final vesting
outcome. The Committee reviewed the performance
underpin of the RSP 2020 award (which vested on 9
November 2023) and determined that a downwards
adjustment of 35% should be made to the final vesting
outcomes of the previous executive directors (Malcolm
Le May and Neeraj Kapur); further details are shared on
page 104.
– RSP 2021 award interim underpin assessment. The
Committee carried out an interim assessment of the
performance underpin of the RSP 2021 award (which is
due to vest on 18 August 2024) and determined that a
downwards adjustment of 25% should be made to the
vesting outcomes. A final assessment will be carried
out in the summer of 2024 prior to vesting and the final
vesting outcome will be disclosed in the 2024 Directors’
Remuneration Report; further details on the interim
assessment are shared on page 105.
Wider workforce pay
Whilst recognising the challenges the Group faced through
the year, the Committee has also been mindful of the need to
retain and motivate our wider staff population for the future
stability of the business. It has been another tough year for
the UK economy, with the cost-of-living pressure continuing
to have an impact on our colleagues. Our pay review in early
2023 focused on our lower paid colleagues and a number of
initiatives were implemented:
– an overall pay budget of 5% for salary increases effective
1 January 2023;
– average increases of over 8% for colleagues who were
in roles at the lower levels and relatively lower paid, and
so were disproportionately hit by general cost-of-living
pressures; and
– all our colleagues were granted an extra day’s holiday in
2023 as a thank you for their hard work and support during
a very difficult latter part of the year.
In addition, for the purpose of greater pay transparency,
we published internally the VBG minimum salary by job level
and location.
In 2024, we intend to continue our focus on our colleagues
who are employed at the lower levels and from January 2024,
the minimum full time salary will be £24,600. We will update
our minimum salary (above the Living Wage for all) by level
(and location) and actively distribute a larger percentage of
our salary review pool to those colleagues.
As noted above, there will be no Group bonus in 2023 due
to our financial performance (2022: 70% of maximum). It is
important to note that this outcome is in no way reflective
of the hard work and commitment our colleagues have
made throughout the year to keep our business running
and help our customers. I want to take this opportunity to
thank our colleagues for their efforts in 2023 in such trying
circumstances.
Executive director remuneration in 2023
Annual bonus for executive directors
The financial element of the annual bonus was below threshold
for 2023 for both adjusted PBT and adjusted RORE and therefore
there was nil vesting under this element. Under the Group’s
non-financial scorecard, the Committee determined a vesting
outcome of 57.5%, which resulted in a total weighted vesting of
23% based on performance against scorecard objectives.
In determining the final bonus outcome, the Committee took
into account a number of factors including the overall business
performance in 2023, and the wider stakeholder experience.
The Committee decided to exercise discretion and make a
downward adjustment to the bonus outcomes for the current
and previous executive directors to zero (note the current CFO,
Dave Watts, was not eligible for the 2023 annual bonus as he
joined on 1 November 2023). We have set out in more detail the
annual bonus results for 2023 on pages 102 to 103.
RSP 2020 award vesting
As reported in last year’s report, the expectation was that the
RSP 2020 awards (which vested in November 2023) for the
previous CEO (Malcolm Le May) and previous CFO (Neeraj
Kapur) would vest in full subject to a final assessment by the
Committee. In October 2023 the Committee reassessed the
RSP 2020 award performance underpin and exercised its
discretion and decided to apply a downward adjustment of
35% to the RSP 2020 award to reflect the material damage to
the reputation of the Group (as viewed by investors) following
the 2023 half-year results announcement for the previous
CEO (Malcolm Le May) and the previous CFO (Neeraj Kapur).
More detailed disclosure is set out on page 104.
RSP 2021 award vesting
The RSP 2021 award was due to be granted in April/May 2021
but due to CCD wind down (Project Strickland) it was delayed
until 18 August 2021. The vesting is subject to an underpin
which provides discretion for the Committee to consider
whether any adjustment to vesting should be made. The
award is therefore scheduled to vest on 18 August 2024.
After careful consideration, the Committee’s interim
assessment as at 31 December 2023 concludes that a
downward adjustment of 25% will be made to the RSP
2021 award to reflect the impact of the Group’s financial
performance in 2023. The Committee will review this
assessment again prior to final vesting and any changes to
the above assessment and the final vesting outcome will be
disclosed in the 2024 Directors’ Remuneration Report.
Departing executive directors
As reported last year the previous CEO (Malcolm Le May)
decided to step down as CEO and retire. He was subject to a
12-month notice period which ended on 24 January 2024.
On 7 August 2023 the previous CFO (Neeraj Kapur) informed
the Board that he was stepping down from his role and as an
executive director with immediate effect for personal reasons.
Neeraj will not receive a bonus for the 2023 performance (in
line with all employees). His unvested RSP awards have been
pro-rated with respect to his leaving date. Neeraj was eligible
for a payment in lieu of notice (PILON) in accordance with the
Directors’ Remuneration Policy (the Policy). See page 102 for
more details.
Vanquis Banking Group plc Annual Report and Accounts 2023
95
Governance Financial statementsStrategic Report Shareholder information
New executive directors
The current CEO (Ian McLaughlin) joined on 26 July 2023. We
set out Ian’s compensation package in last year’s report,
which is in line with the Policy and is shown below:
– salary: £725,000;
– role-based allowance: none;
– annual bonus: up to 150% of base salary (with 40% deferred
over three years);
– RSP: up to 100% of base salary (with a post-vesting holding
period of two years);
– shareholding requirement: 200% of base salary (with up to
five years to be compliant); and
– transitional travel allowance. Following a review of forecast
travel patterns, the Committee exercised discretion
and extended this arrangement to the full 24 months as
permitted under the Policy. See page 101 (note 1) for details.
There are no buyouts or other joining payments.
As intended, we made a full RSP grant to the current CEO (Ian
McLaughlin) of 100% of base salary on 8 September 2023. The
Committee considered whether it was appropriate to make
an adjustment at grant to take into account any potential for
windfall gain as per our internal Policy and determined that
for this grant, given the share price volatility, no discretion was
used in determining the basis of the award granted and it
would be more appropriate to undertake a more considered
assessment at the point of vest as part of the RSP underpin
assessment, to ensure no windfall gains have occurred.
On 1 November 2023 the current CFO (Dave Watts) joined the
Group. In line with the Policy, Dave’s compensation package is
as follows:
– salary: £550,000;
– role-based allowance: none;
– annual bonus: up to 125% of base salary (with 40% deferred
over three years);
– RSP: 75% of base salary (maximum permissible under the
Policy is 100%) (with a post-vesting holding period of two
years); and
– shareholding requirement: 200% of base salary (with up to
five years to be compliant).
Dave did not receive any buyout awards and as part of his
joining package, the Committee agreed that for RSP 2024 only,
his RSP award will be increased to 100%.
Directors’ Remuneration Report and Remuneration Policy
The Committee presented the 2023 Directors’ Remuneration
Policy to shareholders at the 2023 AGM on 25 May 2023 for
up to three years and received the approval and support of
94.8% of shareholders and the 2022 Remuneration Report
received very strong support, with 96% of votes received
in favour. A copy of this Policy can be found on our website
under the Shareholder Hub. Outside of the AGM, there
has been no further engagement with shareholders on
remuneration matters.
Implementation of Directors’ Remuneration
Policy (the Policy) in 2024
The Committee considers that current Policy, approved at
the May 2023 AGM, has operated as intended and does not
require a fundamental change. However, we are proposing
the following changes which the Committee considers to be
appropriate to ensure that the Policy will continue to operate
effectively in line with our strategic priorities and support
attraction and retention of key talent, as follows:
2024 Salary increases
The executive directors and Executive Committee were not
considered as part of the salary review and have forgone their
annual salary increase to augment and redistribute the salary
pool outcomes to lower paid colleagues (average increase of
4% for our colleagues).
2024 Annual bonus
There are no changes in annual bonus opportunity, and we
intend to retain the overall weighting of the financial/non-
financial metrics as 60%/40%. The metrics will be updated
to better reflect business strategy and align with market
practice by:
– retaining adjusted PBT (25%), replacing adjusted RORE
with adjusted ROTE (25%), and including cost:income ratio
(10%); and
– restructuring the weighting of the non-financial metrics
(40%) so that they align with our revised strategic priorities.
2024 Non-executive director (NED) fees
Sir Peter Estlin was appointed Chairman of the Group on 15
September 2023 following regulatory approval. Sir Peter joined
the Board as an independent NED in April 2023 and succeeded
Patrick Snowball as Chairman, who informed the Board of
his intention to step down earlier in 2023. Sir Peter will receive
£275,000 for his role which is 18% lower than fees received by
Patrick (£336,000 in 2023).
The NEDs have taken a significant reduction in their fees
for 2024. The reductions in NED base fees, committee
membership fees and SID fees have collectively (like-for-
like) reduced the total Chair and NED fees by c.20% when
compared with 2023. More details are shared on page 109.
RSP 2024 grant
The Committee has determined an RSP grant at 100% of salary
for the current CEO (Ian McLaughlin) and current CFO (Dave
Watts) for 2024. Subject to underpin criteria, as set out in our
Policy, awards will vest in three years from the date of grant
with an additional retention period of two years after vesting.
The date of grant will be confirmed after the Strategy Seminar
on 27 March 2024. At the point of grant the Committee will
determine whether any adjustment is required to take into
account any potential for windfall gain as per our internal
Policy. Irrespective of the decision made, a further assessment
on windfall gain will be carried out at vest as per the RSP
underpin requirements. The grant of the awards will be
confirmed via a RNS announcement in the usual way and
full details of the approach taken will be set out in the 2024
Directors’ Remuneration Report.
Conclusion
We recognise that it’s been an extremely difficult year for the
business. The Committee believes that, in combination, the
decisions made have been mindful of appropriately reflecting
the shareholder experience over the course of the year and
appropriately adjusting pay to reflect this, while setting up
the business and our next executive team for future success
and ensuring their alignment with future stability and value
creation for our shareholders going forward.
In the rest of this report, we present the disclosures required
by regulations, as well as additional information to explain
how our executive remuneration aligns with our strategy, with
shareholder interests and with wider workforce pay.
I would like to thank our shareholders for their continued
support during the year. I will be available at the Company’s
2024 AGM to answer any questions in relation to this
Remuneration Report.
Graham Lindsay
Remuneration Committee Chair
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
96
Governance
Directors’ Remuneration Report continued
Remuneration at a glance
The following section sets out:
– an illustration of the operation of the Policy for 2024;
– a summary of the executive directors’ single total
remuneration figures, and outcomes under the 2023
Annual Bonus Plan and the RSP 2021 award; and
– an overview of executive directors’ shareholdings.
Salary: No increase from 2023
– CEO: - Ian McLaughlin: £725,000
- Malcolm Le May: £749,700
(Previous CEO. Employment ended 24 January 2024)
– CFO: - Dave Watts: £550,000
- Neeraj Kapur: £551,250
(Previous CFO. Employment ended 23 February 2024)
Role-based allowance (RBA): No change from 2023
– CEO: - Ian McLaughlin: 0% of salary
- Malcolm Le May: 15% of salary
– Maximum annual RBA grant for individual is 25% of salary
– Delivered in shares and released in equal instalments over three years
Pension: No change from 2023
– All EDs: 10% of salary (in line with the wider workforce)
Annual bonus: Changes to the measures and weighting within non-
financial scorecard to reflect business priorities for 2024.
– Maximum opportunity:
– CEO: 150% of salary
– CFO: 125% of salary
– Performance measures:
– 60% financial
– Adjusted PBT 25% (2023: 30%)
– Adjusted ROTE 25% (2023: not used)
– Cost:income ratio 10% (2023: not used)
– Adjusted RORE will be replaced by ROTE in 2024 (2023: 30%)
– 40% non-financial will align to the 2024 North Star strategy and will be
disclosed in the 2024 Directors’ Remuneration Report. (2023: growth
and sustainability 6.7%, people and culture 6.7%, customer and
community 6.6%, transformation 20%)
– Risk overlay and Tier 1 capital ratio underpin
– Deferral: At least 40% deferred, vesting pro-rata over three years in
VBG shares
RSP:
– Award level:
– CEO: maximum 100% of salary
– CFO: maximum 75% of salary (noting that for 2024 grant only this
will be increased to 100%)
– As a part of grant process, the Committee will consider individuals’
personal and business performance for the prior year and determine
whether the proposed level of grant remains appropriate
– Underpins: The Committee will consider the following factors
(amongst others) when determining whether to exercise its
discretion to adjust the number of shares vesting:
– whether threshold performance levels have been achieved for the
performance conditions for the Annual Bonus Plan for each of the
three years covered by the vesting period;
– the underlying financial performance progression over the
vesting period;
– whether there have been any sanctions or fines issued by a
Regulatory Body; participant responsibility may be allocated
collectively or individually;
– whether there has been material damage to the reputation of the
Company; participant responsibility may be allocated collectively
or individually;
– the potential for windfall gains;
– the level of colleague and customer engagement over the vesting
period; and
– the level of achievement of our approach to ESG as set out
by the Board
– Vesting: Three years with a two-year holding period post-vesting
Shareholding requirement:
– CEO/CFO: 200% of salary
– Full requirement to be held for two years post-cessation
Further details on the implementation of the Policy, have been set out
later in this report under the ‘Directors’ Remuneration Policy in 2024’
section on pages 108 to 109.
Illustration of the Policy in 2024
Restricted Share Plan
CEO – 100% of salary
CFO – 75% of salary
Restricted
shares
Salary,
pension,
benefits
paid
Shares
vest after
3 years
Vested
shares
released
after
2 years
+1 +2 +3 +4 +5 +6
Minimum shareholding of 200% of salary
Vesting period
subject to continued
employment
and underpin
2-year
holding
period
(EDs only)
1/3 vest
1/3 vest
1/3 vest
Deferred
bonus
At least
40%
Cash
bonus
60%
Part of the bonus
is deferred into
shares vesting pro-
rata over 3 years
(no performance
conditions)
Annual bonus
CEO – 150% of salary
CFO – 125% of salary
Fixed remuneration
Year 0
(performance
year)
Vanquis Banking Group plc Annual Report and Accounts 2023
97
Governance Financial statementsStrategic Report Shareholder information
Executive director 2023 remuneration outcomes
The charts below show an estimate of the remuneration that could be received by executive directors under the Policy and
how our performance has flowed through to the remuneration provided to our executive directors. The full explanatory notes
for each element of remuneration are detailed on pages 108 to 109 in the Annual Report on Remuneration.
Remuneration (£’000)
Fixed
Annual bonus
RSP
Share price
Minimum Minimum
Ian McLaughlin, CEO Dave Watts, CFO
Maximum Single
figure
2023
1
Single
figure
2022
Single
figure
2023
1
Single
figure
2022
Maximum
On
target
On
target
Assumptions
– Minimum pay is fixed pay only, i.e. salary + benefits + pension + RBA.
– On-target pay includes fixed pay, 60% of the maximum bonus (with
maximum equal to 150% of salary for the CEO and 125% for the CFO)
and 100% vesting of the RSP awards (with grant levels of 100% of
salary for the CEO and CFO (75% new CFO)).
– Maximum pay includes fixed pay and assumes 100% vesting of both
the annual bonus and the RSP awards.
– The illustration of ‘maximum’ assumes a 50% share price
increase on the RSP award over the vesting period and is shown
as ‘share price’.
– All amounts have been rounded to the nearest £1,000.
– The value of taxable benefits is the cost of providing those benefits
in the year ended 31 December 2023.
809
809
2,187
725
653
809
2,984
725
363
1,088
809
393
393
617
206
617
1,442
413
413
617
1,923
413
688
617
104
Minimum Minimum
Malcolm Le May, CEO Neeraj Kapur, CFO
Maximum Single
figure
2023
1,2
Single
figure
2022
3
Single
figure
2023
1,2
Single
figure
2022
4
Maximum
On
target
On
target
952
952
2,377
750
675
952
3,201
750
375
1,125
952
551
551
620
276
620
1,585
551
413
620
2,136
551
689
620
369
369
188
878
989
2,056
1,277
616
577
84
1 Single figure for 2023 pro-rated to time served as executive director.
2 RSP includes the (interim) downwards adjustment of 25% for the RSP 2021 award.
3 RSP amount (£’000) restated (from 529 to 188) to reflect the 35% downwards adjustment made to the RSP 2020 award and difference in assumed
and actual share price.
4 RSP amount (£’000) restated (from 235 to 84) to reflect the 35% downwards adjustment made to the RSP 2020 award and difference in assumed
and actual share price.
Vanquis Banking Group plc Annual Report and Accounts 2023
98
Governance
2023 annual bonus outcome
The tables below summarise performance against the targets set for the 2023 bonus and the outcome, before and after
Committee discretion.
Outcome
Threshold Target Maximum CEO CFO CFO
85% 100% 110% Actual Weighting (IM) (MLM) (NK)
Financial 60% 0% 0% 0%
Adjusted PBT £70.2m £82.6m £90.9m £24.9m 30% 0% 0% 0%
Adjusted RORE 11.6% 13.6% 15.0% 4.0% 30% 0% 0% 0%
Non-financial 40% 23% 23% 23%
Risk overlay Met Met Met
Tier 1 gateway
The Group achieved a Tier 1 ratio of 20.4%
(above our hurdle)
Scorecard outcome (as a % of maximum bonus) 23% 23% 23%
Final outcome (as a % of maximum bonus) after Committee discretion 0% 0% 0%
Link between remuneration and equity of the executive directors
We believe that equity has an important part to play in the remuneration of the executive directors. There is a need for the
executive directors to understand from first-hand experience the position of the shareholders and our RSP (and deferred bonus
schemes) are structured to support that understanding. This link has been strengthened in the last few years as we require our
executive directors to hold their shares for a period of two years post-departure. We monitor regularly that the directors are on
track to meet their obligations under the Share Ownership Policy, and we confirm, although they are early in tenure, that the
current CFO and CEO are both currently on track. It should be noted that, on leaving, there is a requirement that the previous CEO
and CFO’s shareholding position on exit should be maintained for a further two years.
To ensure that our executive directors are incentivised to take a long-term, sustainable view of the performance of the Company,
when we look at the remuneration paid in the year, we also look at the total equity they hold, and its value based on the
performance of the Company.
The table sets out the number of shares beneficially owned by the executive directors at the beginning and end of the financial
year, and the impact on the value of these shares taking the opening and closing price for the year.
2023
single
figure
£’000
1
Shares
held at
the start
of the year
Shares
held at
the end
of the year
Value of
shares at
the start of
the year
2
£‘000
Value of
shares at
the end of
the year
3
£’000
Difference
£’000
CEO (Ian McLaughlin) 393 — 1,028,939 — 1,329.4 1,329.4
CFO (Dave Watts) 104 — 40,000 — 51.7 51.7
Previous CEO (Malcolm Le May) 551 1,137,332 1,145,091
4,5
2,174.6 1,479.5 (695.1)
Previous CFO (Neeraj Kapur) 369 689,299 709,926
4,5
1,317.9 917.2 (400.7)
1 Based on amount shown in the single figure of remuneration table.
2 Based on a closing share price on 30 December 2022 of £1.912.
3 Based on a closing share price on 29 December 2023 of £1.292.
4 Includes the 25% downwards adjustment to the RSP 2021 award for both previous executive directors (Malcolm Le May and Neeraj Kapur) which is subject to
final underpin assessment just before grant and will be confirmed in the 2024 DRR.
5 Includes pro-ration for time applied to the RSPs of both previous executive directors (Malcolm Le May and Neeraj Kapur) due to them leaving in 2024.
Directors’ Remuneration Report continued
Remuneration at a glance continued
Vanquis Banking Group plc Annual Report and Accounts 2023
99
Governance Financial statementsStrategic Report Shareholder information
Remuneration principles and alignment to the Corporate Governance Code
We strongly believe in fair and transparent reward throughout the organisation and when making decisions on executive
remuneration the Committee considers the context of wider workforce remuneration. This section shows how the 2018 Code is
embedded in our remuneration principles and how, in 2023, they are cascaded throughout the organisation. The table below
shows how the Policy is aligned with the factors set out in Provision 40 (which sets out a list of matters for the Remuneration
Committee to address when determining the Policy and practices – these fall under the headings of clarity, simplicity, risk,
predictability, proportionality and alignment to culture), and how our principles and Policy are aligned with the 2018 Code.
Our strategy (2023)
Growth and Sustainability People and Culture Customer and Community
Our remuneration principles
– Support delivery
of the Group’s
business strategy,
realise our vision
and be customer
champion within
our sector.
– Have flexibility in
delivering total
remuneration
outcomes
in changing
market,
economic,
commercial
and regulatory
circumstances.
– Maintain a competitive reward and
recognition offering in the markets in
which we compete, thereby supporting
our talent attraction, engagement and
retention aims.
– Ensure remuneration outcomes are
fair and consistent, reflect pay for
performance and are clear and
transparent for all our colleagues.
– Support and mitigate any conflicts of
interests.
– Manage remuneration opportunities
and outcomes for regulated colleagues
under the SMCR and material risk takers
under the Remuneration Code.
– Support the effectiveness of the Group’s
Enterprise Risk Management Framework
and incentivise the delivery of the
business strategy within risk appetite via
a controls-based framework and positive
risk conduct culture.
– Drive the Group’s ESG strategy, including
diversity, equality and inclusion agenda.
– Align the interests of our colleagues with
those of our customers, regulators and
shareholders.
How does the Committee address the requirements under Provision 40?
Cultural
alignment
– The Committee
ensures that the
overall reward
framework
embeds our
Purpose.
– The Committee
reviews the
executive reward
framework
regularly to
ensure it supports
the Company’s
culture and
strategy.
– The ED
Remuneration
Policy is cascaded
down the
organisation
ensuring that
there are
common goals.
Proportionality
– Performance
measures under
the annual
bonus as well as
the RSP underpin
are aligned with
the Company’s
scorecard
and the
payouts reflect
achievement
against the
target.
– The Committee
may apply
discretion
to reduce
outcomes under
the annual
bonus and
RSP – if they
are considered
inconsistent with
the underlying
performance of
the business.
Simplicity
– Policy for EDs is
simple and clear,
consisting of:
– fixed pay
(salary,
benefits and
fixed pension
contribution)
set to reflect
the typical
rate provided
to the UK
workforce; and
– variable pay
comprising an
annual bonus
scheme (partly
deferred into
shares) and
RSP awards
which provide
focus over the
long term.
– The Committee
avoids
unnecessary
complexity in
operating the
arrangements.
Predictability
– The Committee
sets specific
targets for
different levels
of performance
which are
communicated
to the EDs and
disclosed to
shareholders.
Clarity
– Remuneration
arrangements
have defined
parameters
that can be
transparently
communicated to
shareholders and
stakeholders.
– The Committee
consulted with
shareholders as
part of the design
phase of the
Policy approved
at the 2020 GM
and re-approved
at the 2023 AGM.
– How executives’
pay is set has
subsequently
been
communicated
to the wider
workforce along
with how it is
aligned with
the Company’s
approach to wider
pay policy and
how decisions
are made by the
Committee.
Risk
– Remuneration
arrangements
are designed to
create a robust link
between pay and
performance thereby
mitigating risk of
excessive reward.
– Policy has
safeguards
including Committee
discretion to adjust
incentive outcomes.
– The Committee
ensures that a
significant portion
of reward is equity
based and has
deferral (40% of
annual bonus
deferred in shares
for three years and
all of RSP is in shares)
and thereby linked to
shareholder return.
– Recovery provisions
such as malus and
clawback apply to
the Policy.
– Executives are
required to build
significant personal
shareholdings in the
Company.
Annual Report on Remuneration
Vanquis Banking Group plc Annual Report and Accounts 2023
100
Governance
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Remuneration governance
The Committee met four times in 2023 plus six ad hoc meetings. The following schematic sets out the key considerations for the
Remuneration Committee during 2023:
Governance Annual bonus Share plans
All
colleague
matters General DRR
Design Review Grant Review Risk Shareholder
January
March
May
June
August
September
October
December
The CEO, the CPO and the Head of Reward also attend meetings, by invitation, to provide advice and respond to specific
questions. Such attendances are specifically excluded on any matter concerning their own remuneration. The CRO attends
several meetings throughout the year to provide updates, where necessary. The General Counsel and Company Secretary
acts as secretary to the Committee.
Advisors to the Committee
To ensure that the Company’s remuneration practices are in line with best practice, the Remuneration Committee has
appointed independent external remuneration advisors, PricewaterhouseCoopers LLP (PwC). This appointment in 2020 followed
a competitive tender process. PwC attends meetings of the Committee. The Committee reviewed the performance of PwC
during 2023 and determined that it was strong, and that the appointment should continue into 2024.
Fees, on a time-spent basis, for the advice provided by PwC to the Committee during 2023 were £113,438 excluding VAT
(2022: £192,115). Other than advice in relation to remuneration, PwC provides subject matter expertise support to management
on specific projects when requested. In 2023, this has included support in relation to IT, risk management and regulatory and
accounting advice. The Committee is satisfied that PwC engagement partners and teams which provided remuneration advice
to the Committee do not have connections with the Group or the executive directors that may impair their objectivity and
independence.
Vanquis Banking Group plc Annual Report and Accounts 2023
101
Governance Financial statementsStrategic Report Shareholder information
Single total figure of remuneration (audited)
The table below sets out a single total figure of remuneration for each director for the year ended 31 December 2023 and the prior year:
Salary/fees
£’000
Role-based
allowance
(RBA)
£’000
Taxable
benefits
1
£’000
Annual
bonus
2
£’000
RSP
4
£’000
Pension
3
£’000
Total
£’000
Total
fixed
remuneration
£’000
Total
variable
remuneration
£’000
Executive directors
Ian McLaughlin 2023 314 n/a 48 — — 31 393 393 —
2022 — — — — — — — — —
Dave Watts
,
5
2023 92 n/a 3 — — 9 104 104 —
2022 — — — — — — — — —
Malcolm Le May 2023
6
435 65 7 — — 44 551 551 —
2022 750 112 15 878 188 112 2,056 989 1,067
Neeraj Kapur 2023
6
329 n/a 7 — — 33 369 369 —
2022 551 n/a 14 577 84 51 1,277 616 661
Non-executive directors
Sir Peter Estlin 2023 116
7
n/a — n/a n/a n/a 116 116 n/a
2022 — — — — — — — — —
Patrick Snowball 2023 336 n/a 1 n/a n/a n/a 337 337 n/a
2022 336 n/a 1 n/a n/a n/a 337 337 n/a
Andrea Blance 2023 120 n/a 1 n/a n/a n/a 121 121 n/a
2022 128 n/a 1 n/a n/a n/a 129 129 n/a
Elizabeth Chambers 2023 96 n/a 14 n/a n/a n/a 110 110 n/a
2022 87 n/a 33 n/a n/a n/a 120 120 n/a
Paul Hewitt 2023 112 n/a 5 n/a n/a n/a 117 117 n/a
2022 112 n/a 3 n/a n/a n/a 115 115 n/a
Margot James 2023 87 n/a — n/a n/a n/a 87 87 n/a
2022 87 n/a — n/a n/a n/a 87 87 n/a
Angela Knight 2023 112 n/a — n/a n/a n/a 112 112 n/a
2022 112 n/a — n/a n/a n/a 112 112 n/a
Graham Lindsay 2023 112 n/a 2 n/a n/a n/a 114 114 n/a
2022 112 n/a 5 n/a n/a n/a 117 117 n/a
Michele Greene 2023 71 n/a — n/a n/a n/a 71 71 n/a
2022 — — — — — — — — —
1 Executive directors receive standard market comparable benefits such as medical insurance. For the current CEO, the temporary travel allowance of
£100,000 per annum is included here. NEDs have travel expenses reimbursed and, to the extent that those are taxable, grossed up for tax and NIC.
2 40% of any annual bonus earned is deferred into shares for an additional three years (subject to continued service, in normal circumstances).
3 Pension participation is via a defined contribution plan (or cash alternative) with no executive director having a prospective entitlement under a defined
benefit plan.
4 The RSP value (£’000) for the single figure of remuneration for 2022 has been restated for previous executive directors (Malcolm Le May (was 529, now 188)
and Neeraj Kapur (was 235, now 84)) and as a result of the 35% downwards adjustment made (and difference in the assumed share price and actual share
price) to the RSP 2020 award which vested on 9 November 2023 (further detail on the assessment is set out on page 104). This means that the total fixed and
total variable remuneration for 2022 as shown is lower than that provided in the 2022 Directors’ Remuneration Report.
5 Note that an interim CFO was appointed from within the Company (Chief Risk Officer, Gareth Cronin) to cover the gap between previous CFO (Neeraj Kapur)
leaving on 7 August 2023 and current CFO (Dave Watts) joining on 1 November 2023. Gareth was not an executive director during this period.
6 Figures are pro-rated to cover the period that Malcolm Le May and Neeraj Kapur were executive directors. See ‘payments to former directors’ for more
details.
7 This includes a backdated payment of £55,261 made in January 2024 to cover the period as Chairman from 15 September 2023 to 31 December 2023 with
respect to the new (reduced) 2024 Chairman fee of £275,000 as shown on page 109.
Payments to former directors
Previous CEO (Malcolm Le May)
Following the announcement on 24 January 2023 that he would be retiring as CEO, Malcolm was considered a good leaver and
was entitled to 12 months’ notice, under his contract of employment. He stepped down from the Board as an executive director
on 1 August 2023 and in line with the Policy, he continued to receive his salary (£749,700 per annum paid monthly), role-based
allowance (£112,455 per annum paid quarterly and released in equal instalments over three years in the form of shares), pension
(£74,970 per annum paid monthly) and other benefits during the remainder of his notice period in accordance with his service
agreement and the Policy. The amounts received during 2023 from 1 August 2023 to 31 December 2023 were salary (£314,258),
role-based allowance (£47,139), pension (£31,426) and other benefits (£4,737). Malcolm also received a contribution of £20,000
towards legal fees in connection with him leaving the Company and the Company paid for him to attend outplacement support
sessions at a value of £10,000. His RSP 2020 award, which was adjusted downwards by 35% (see page 104), vested on 9 November
2023 with a value of £188,200 (as shown under the restated single figure of remuneration for 2022). His unvested RSP and DBP
awards will vest on their normal vesting dates in line with the relevant rules and the Policy, and subject to the two-year post-
employment shareholding requirements. DBP awards will vest in full and RSP awards will be time pro-rated to his last day of
employment.
Vanquis Banking Group plc Annual Report and Accounts 2023
102
Governance
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Payments to former directors continued
Previous CFO (Neeraj Kapur)
On 7 August 2023 Neeraj informed the Board that he would be stepping down from his role and as an executive director with
immediate effect for personal reasons. Neeraj was entitled to 12 months’ notice, under his contract of employment and in line
with the Policy. During the period of his employment he continued to receive his salary (£551,250 per annum paid monthly),
pension (£55,125 per annum paid monthly) and other benefits in line with his service agreement and the Policy. He is eligible
to receive a Payment in Lieu of Notice (PILON) for salary for the remainder of his notice period following the cessation of his
employment. The amounts received during 2023 from 7 August 2023 to 31 December 2023 were salary (£222,010), pension
(£22,201) and other benefits (£4,672). Neeraj also received a contribution towards legal fees of £20,000 in connection with him
leaving the Company and £27,000 in connection with other matters. The Company will also pay for him to attend outplacement
support sessions up to an aggregate value of £30,000. The final amounts will be reported in the 2024 report. He will not receive
a bonus for the 2023 performance (in line with all employees). His RSP 2020 award, which was adjusted downwards by 35% (see
page 104), vested on 9 November 2023 with a value of £83,700 (as shown under the restated single figure of remuneration for
2022). His unvested RSP and DBP awards will vest on their normal vesting dates in line with the relevant rules, and the Policy and
subject to the two-year post-employment shareholding requirements. DBP awards will vest in full and RSP awards will be time
pro-rated to his last day of employment.
2023 bonus outcome calculation (audited)
The bonus is based 60% on financial performance measures and 40% on non-financial performance measures. The tables
below set out performance against the targets set for the 2023 bonus and the outcome.
Details of the financial assessment
Performance range
Financial targets Weighting
Threshold
85%
Target
100%
Maximum
110% Actual
Outcome
as % of max
Weighted
outcome
Adjusted PBT
1
30.0% £70.2m £82.6m £90.9m £24.9m 0% 0%
Adjusted RORE 30.0% 11.6% 13.6% 15.0% 4.0% 0% 0%
1 Certain alternative performance measures (APMs) have been used in this report. See pages 189 to 191 for an explanation of their relevance as well as their definition.
Details of the non-financial assessment
The non-financial element was assessed at 57.5% achievement with this broken down, in 2023, as follows:
Objective Assessment of non-financial metrics Rating
Growth and
Sustainability
16.7%
Complete implementation of UK operations outsourcing in line with the defined 2023 plan
– During the course of 2023, we reduced UK operations FTE by c.595, which significantly exceeds the original
target (of reducing UK operations FTE by 275), by an incremental 320 FTE.
Develop a second charge lending book
– Heads of Terms signed with a strategic partner that provides VBG with an option to acquire a second
charge mortgage business in 2028-29.
To deliver Riskonnect system
– System is fully embedded and was favourably assessed as part of the PwC Risk EQA.
On target (plus)
67%
Vanquis Banking Group plc Annual Report and Accounts 2023
103
Governance Financial statementsStrategic Report Shareholder information
Objective Assessment of non-financial metrics Rating
People and
culture
16.7%
To deliver and complete the Group Rename Project
– The name change was completed in early 2023 within the timeframe and c.25% below budget.
– The change involved over 100 changes or workstreams and involved a significant stakeholder
communications plan internally and externally. Stakeholder reaction was positive and understood.
Employee Engagement Index (EEI)
– 56% (down 23 percent points). Colleagues completed the new ‘Great Place to Work’ survey in December
during a period of significant change for the business including a change in the senior management team,
redefining of business priorities and a reduction in headcount. The results provide a baseline for us to build on
and develop our colleague proposition and culture and leadership work as part of the North Star strategy.
Progress towards commitment to the Women in Finance Charter
– On track to meet the medium-term aspiration of 40%. Current tracking is over 30%.
Refresh and launch the values and behaviours needed to achieve our mission and deliver on our Purpose
– Successfully refreshed and launched our new values which were embedded into our mid-year and end of
year performance management process.
– Embedded our new values into our refreshed recognition strategy along with launching our new recognition
platform aligned to our values.
On target (mid)
60%
Customer and
community
16.7%
Deliver targeted customer satisfaction score (CSat) across all product lines
– Customer service SLAs have shown volatility throughout the year as a result of material above plan new
business volumes and the disruptive impacts of offshoring.
– In late Q4, following the final phase of offshoring, the operation has stabilised well across key customer facing
activities and we are predominantly on target across all customer SLAs.
Deliver agreed ESG programme, including launch of VBG Foundation
– The Vanquis Banking Group Foundation was launched in June 2023 via internal and external channels
in line with the Group’s plan. Positive media and social media accompanied the launch, and internal
communication colleague feedback was positive. The Foundation programme was nominated for the
Cards & Payments Awards 2024 ‘Changing Lives in the Community award’.
– Colleague volunteering has significantly increased in 2023 when compared with 2022 showing stronger
colleague engagement in the Foundation; this increase is set against a backdrop of a reduction in
headcount in 2023.
– TCFD disclosure completed and included on pages 19 to 28. Two science-based carbon reduction targets for
our scope 1 and 2 GHG emissions and the scope 3 GHG emissions associated with our suppliers have been
approved by Science Based Targets initiative (SBTi) NGO, ensuring that these targets are in line with what the
latest climate science deems necessary to limit global warming to 1.5°C above pre-industrial levels.
– The Group was notified in June 2023 that it remains a constituent of the FTSE4Good, an ESG index.
Below target
(high)
38%
Group
transformation
50%
– Successful delivery of the 2023 Change Portfolio to agreed timescales and costs.
– With approval from the Board, the 2023 Change Portfolio target was reduced in October from £42.7m
to c.£30m because of changes to the cost challenge as a result of our headcount reduction in Q4.
– Changes to the portfolio for both Gateway and non-Gateway were successfully implemented with delivery
of agreed changes continuing across all areas of the portfolio through Q4.
On target
60%
Risk Continued improvement in risk position since 2020.
Taking the above into consideration and following feedback from the CRO, the Committee determined that no
discretion should be applied to remuneration outcomes.
On target/on
target (plus)
66%
Risk overlay
A risk overlay approach was used for potential risk adjustment with a range of factual criteria for assessment agreed with the
Committee. This forms the basis of our Group Variable Risk Adjustment Framework and allows for a more flexible and holistic approach
to be adopted which considers not only the business outcomes (quantitative), but also how these have been achieved (qualitative).
After discussion with the Group CRO, and the Chair of the Group Risk Committee, the Committee concluded that, overall, the risk
position has remained stable in 2023.
Remuneration Committee discretion – final outcome for 2023
In determining the final bonus outcome, the Committee took into account a number of factors including the overall business
performance, and the wider stakeholder experience. The Committee decided to exercise discretion and make a downward
adjustment to the bonus outcomes for the current and previous executive directors to zero.
Vanquis Banking Group plc Annual Report and Accounts 2023
104
Governance
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Scheme interests awarded in the year (audited)
Deferred Bonus Plan (DBP)
The DBP awards made during 2023 are set out below. 40% of the 2022 annual bonus earned was deferred into shares for three
years. The face value is based on the Company’s share price on 12 April 2023 of £2.224. The grant price is calculated using the
average price of a Vanquis Banking Group share for the five dealing days prior to grant and discounted from that price at grant
to reflect the absence of dividend equivalents during the vesting period.
Executive director Date of award RSP award (shares) Face value of award Date of vesting Release date
Malcolm Le May 12 April 2023 190,539 £351,354 12 April 2026 12 April 2026
Neeraj Kapur 12 April 2023 125,122 £230,725 12 April 2026 12 April 2026
Note that the 2023 DBP award for performance year 2022 will vest in full on the date of vesting as permitted by the DBP rules and subject to malus and clawback.
RSP 2023 award grant
The RSP awards made during 2023 are set out below. An award of 100% of salary was made to both CEOs and the previous CFO.
This represented a 0% discount to the normal level permitted under the Policy.
The face value is based on the Company’s share price on 12 April 2023 of £2.224 and on 8 September 2023 of £1.076. The grant
price is calculated using the average price of a Vanquis Banking Group share for the five dealing days prior to grant and
discounted from that price at grant to reflect the absence of dividend equivalents during the vesting period.
Executive director Date of award
RSP award
(share options) Face value of award Date of vesting End of holding period
Ian McLaughlin 8 September 2023 964,095 £725,000 8 September 2026 8 September 2028
Malcolm Le May
1
12 April 2023 406,561 £749,700 12 April 2026 12 April 2028
Neeraj Kapur
2
12 April 2023 298,942 £551,250 12 April 2026 12 April 2028
1 The RSP 2023 grant for Malcolm Le May is pro-rated for time to his last day of employment. He is not eligible for the RSP 2024.
2 The RSP 2023 grant for Neeraj Kapur is pro-rated for time to his last day of employment. He is not eligible for the RSP 2024.
These awards are conditional share awards without any performance targets. However, they are subject to underpins that will
apply over the initial three-year vesting period. The Committee will take into account the following factors (amongst others)
when determining whether to exercise its discretion to adjust the number of shares vesting:
– whether threshold performance levels have been achieved for the performance conditions for the bonus for each of the
three years in the vesting period;
– the underlying financial performance progression of the Group over the vesting period;
– whether there have been any sanctions or fines issued by a regulatory body; participant responsibility may be allocated
collectively or individually;
– whether there has been material damage to the reputation of the Company; participant responsibility may be allocated
collectively or individually;
– the potential for windfall gains; and
– the level of colleague and customer engagement over the vesting period.
In all cases, vesting is subject to the Committee’s holistic assessment based on business performance, individual performance
or wider Group considerations.
The RSP awards on vesting must be held (subject to sales to meet PAYE and NIC liabilities) for a period of two years
following vesting.
RSP 2020 award vesting (audited)
As noted in last year’s report, the Committee’s interim assessment as at 31 December 2022 suggested that no adjustment will be
required for RSP 2020 awards (which vested in November 2023) for the previous CEO (Malcolm Le May) and previous CFO (Neeraj Kapur),
subject to a review by the Committee prior to final vesting.
In October 2023 the Committee carried out a final review of the performance underpin attached to the RSP 2020 award, taking into
account a number of factors including the material damage to the reputation of the Company based on investors’ feedback following
the announcement of the interim results for the six months ended 30 June 2023 which resulted in a significant fall in the share price.
The Committee decided to exercise its discretion to apply a downward adjustment of 35% to the RSP 2020 award for the previous CEO
(Malcolm Le May) and the previous CFO (Neeraj Kapur). Downward adjustments were also made to the majority of the RSP 2020 award
recipients.
No further adjustment would be made for windfall gains as the Committee had reduced the award at grant by 15% having
considered the share price movement prior to grant date.
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Governance Financial statementsStrategic Report Shareholder information
RSP 2021 award vesting (audited)
The RSP 2021 award was due to be granted in April/May 2021 but due to CCD wind down (Project Strickland) it was delayed until 18
August 2021. The vesting is subject to an underpin which provides discretion for the Committee to consider whether any adjustment
to vesting should be made.
The underlying desire was (and remains) to ensure that participants have been positive custodians of: (i) the underlying financial health
of the business; (ii) maintaining our reputation; (iii) making progress on our strategic imperative of “being a leading specialist bank
focused on underserved markets”; (iv) ensuring that we meet our ESG commitments (and, in particular, our social commitments); and (v)
appropriately focused on our agreed risk appetite. The Committee reviewed performance against the underpin attached to the RSP 2021
awards (and the underlying desire as set out above) as at 31 December 2023 (the last full performance year prior to vesting), and took
into account a number of factors, including:
– formulaic threshold performance levels were exceeded overall for the performance conditions for the Bonus Plan for two of
the three years in the vesting period, i.e. 2021 and 2022. The threshold was not met for the financial year 2023;
– the financial performance progression of the Group over the vesting period was not in line with expectation;
– the regulatory position of the Company remains positive and there have been no sanctions or fines issued by a
regulatory body;
– the potential for windfall gains;
– there has been material damage to the reputation of the Group (as viewed by our investors) following the announcement
of the interim results for the six months ended 30 June 2023, noting that this was considered and reflected in the RSP 2020
award vesting as noted previously; and
– the level of colleague and customer engagement over the vesting period remains strong.
The Committee also took into account the decisions made in relation to the 2023 annual bonus and RSP 2020 award vesting:
– the poor financial performance of 2023 meant that there was no bonus payout for the 2023 performance year for RSP 2021
award recipients;
– the significant reduction in share price over the vesting period; and
– the adjustment for the previous RSP 2020 award to reflect the damage to the reputation of the Group (as viewed by our
investors), and the significant fall in share price in 2023 (underpinned by poor financial performance of 2023).
After careful consideration, the Committee’s interim assessment as at 31 December 2023 suggests that a downwards adjustment of 25%
will be made to the RSP 2021 award for the previous CEO (Malcolm Le May) and the previous CFO (Neeraj Kapur). Downward adjustments will
be made to all other RSP 2021 award recipients. The Committee will review this assessment again prior to final vesting and any changes to
the above assessment and the final vesting outcome will be disclosed in the 2024 Directors’ Remuneration Report.
It should be noted that the Committee has a formal Policy concerning potential windfall gains and makes, where appropriate, an
adjustment at the point of grant with another assessment at the point of vesting. In 2021, there was no adjustment made to the grant price
because during the period of the delay of the grant, the share price increased by c.58% (213p to 337p) which had the effect of reducing
the number of shares awarded. The Committee reassessed the potential for windfall gains and decided that no further adjustment
was required.
Fees from other directorships
Dave Watts has been a NED for CAF Bank since 23 August 2021. He retains no fees from this appointment.
Malcolm Le May has been a NED of IG Group plc since September 2015. He retains the fees from this appointment. During
2023, the total fees amounted to £153,250 (made up of (i) UK fees amounting to £68,250, and (ii) an additional £85,000 from US
responsibilities) (2022: £150,582).
Ian McLaughlin and Neeraj Kapur did not hold any external directorship for the period from 1 January 2023 to 31 December 2023.
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Governance
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Statement of directors’ shareholding and share interests (audited)
The table below shows the interests of the directors and connected persons in shares (owned outright or unvested) as at 31 December
2023. There have been no further changes in directors’ interests in the period between 31 December 2023 and 27 March 2024.
Shares
owned
outright
1
Unvested
shares not
subject to
performance
Unvested
share options
subject to
performance
Vested but
unexercised
options
Total
scheme
interests
Shareholding
guideline
% of salary
Current
shareholding
% of salary
4
Guideline
met
Executive directors
Ian McLaughlin 10,000 — 1,018,939 — 1,018,939 200% 2% No
Dave Watts 40,000 — — — — 200% 9% No
Malcolm Le May (ex CEO) 239,696
1
413,356
5
492,039
2, 3
— 905,396 200% 113% No
Neeraj Kapur (ex CFO) 153,699
1
222,464 333,763
2, 3
— 556,227 200% 88% No
Non-executive directors
Sir Peter Estlin 50,000
6
— — — n/a n/a n/a
Patrick Snowball 96,477
7
— — — — n/a n/a n/a
Andrea Blance — — — — — n/a n/a n/a
Elizabeth Chambers 12,000 — — — — n/a n/a n/a
Paul Hewitt 34,205 — — — — n/a n/a n/a
Margot James — — — — — n/a n/a n/a
Angela Knight — — — — — n/a n/a n/a
Graham Lindsay 26,464 — — — — n/a n/a n/a
Michele Greene — — — — — n/a n/a n/a
1 Includes RSP 2020 options exercised in 2023.
2 Includes the 25% downwards adjustment to the RSP 2021 award which is subject to final underpin assessment prior to the vesting date of 18 August 2024 and will
be confirmed in the 2024 DRR.
3 Includes pro-ration for time applied to the RSPs of both previous executive directors (Malcolm Le May and Neeraj Kapur) due to them leaving in 2024.
4 Rounded to the nearest whole percent. Shares owned outright and unvested shares not subject to performance are included when assessing current
compliance to shareholding guideline. Based on a closing share price on 29 December 2023 of £1.292.
5 Includes 2,520 shares as part of the RBA which was due to be granted on 31 December 2023 but was granted on the next trading day of 3 January 2024.
6 Does not include 50,000 shares held by a person closely associated with Sir Peter Estlin, as reported in the table ‘Directors’ interests in shares’ on page 88.
7 As at 15 September 2023 when Patrick Snowball stepped down from the Board.
The shareholding guidelines for the current executive directors have not yet been met but the Policy provides for sufficient time
to be compliant. A breakdown of the journey to compliance can be seen below.
Statement of directors’ compliance with the Share Ownership Policy
The following sets out the expected level of share ownership that the executive directors will acquire over the period 2023 to 2026.
The current executive director holding requirement is 200% of base salary. Note that both previous executive directors (Malcolm
Le May and Neeraj Kapur) will leave the Group in 2024 and will be subject to the post-employment shareholding requirements,
which in both cases is to maintain the actual shareholding on the date of leaving (excluding purchased shares) plus any shares
acquired, on a ‘net-of-tax basis’, after the date of leaving for two years following the date of leaving, in line with our Policy.
Assumptions
1 Only share awards held on 29 December 2023 are included. Future RSP and DBP awards yet to be granted (for current executive directors (Ian McLaughlin
and Dave Watts) are not included.
2 Includes pro-ration for time applied to the RSPs of both previous executive directors (Malcolm Le May and Neeraj Kapur) due them leaving in 2024.
3 Includes the 25% downwards adjustment to RSP 2021 award which is subject to final underpin assessment in 2024 and will be confirmed in the 2024 DRR.
4 A 100% vesting outcome for RSPs 2022 and 2023.
5 Figures are ‘net of tax’ and a personal tax rate of 47% over the period of vest.
6 Rounded to the nearest whole percent. Share price remains static, based on a closing share price on 29 December 2023 of £1.292.
Current CEO
(Ian McLaughlin)
Forecast ED shareholding position
Previous CEO
(Malcolm Le
May)
Previous CFO
(Neeraj Kapur)
Current CFO
(Dave Watts)
200%
150%
100%
50%
0%
Own shares (purchased or vested buyout/
DBP/RSP/RBA)
Unvested shares not subject to
performance (DBP/RBA)
Unvested shares subject to performance (RSP)
105%
129%
9%
98%
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Relative importance of spend on pay
The table below shows how the Company’s performance metrics compare to total colleague pay expenditure for the financial
years ended 31 December 2022 and 31 December 2023.
Relative importance of spend on pay 2023 2022
Year-on-year
change
Shareholder distributions
1
£38.4m £42.8m -10%
Net income £488.8m £480.7m 2%
Adjusted PBT £24.9m £126.6m -80%
Adjusted EPS 6.8p 38.7p -82%
All remuneration costs
2
£111.7m £125.9m -11%
1 Reflects dividends only as there were no buybacks.
2 Remuneration costs include: aggregate gross wages and salaries paid to the Group’s employees and share-based payment charge as referred to in the
employment cost table on page 149.
Service contracts
The executive directors are employed under contracts of employment with the Company. The principal terms of the executive
directors’ service contracts are as follows.
Notice period
Executive director Position Effective date of contract From Company From director
Ian McLaughlin Chief Executive Officer 26 July 2023 12 months 12 months
Dave Watts Chief Financial Officer 1 November 2023 12 months 12 months
Malcolm Le May Previous Chief Executive Officer 1 February 2018 12 months 12 months
Neeraj Kapur Previous Chief Finance Officer 1 April 2020 12 months 12 months
The Chairman and non-executive directors have letters of appointment. Dates of the directors’ letters of appointment are set
out below:
Name Date of original appointment Date and actual date of expiry
Sir Peter Estlin 19 April 2023 18 April 2026
Patrick Snowball 21 September 2018 15 December 2023
Andrea Blance 1 March 2017 1 February 2024
Elizabeth Chambers 31 July 2018 30 June 2024
Paul Hewitt 31 July 2018 30 June 2024
Margot James 27 July 2020 25 May 2026
Angela Knight 31 July 2018 30 June 2024
Graham Lindsay 1 April 2019 30 June 2025
Michele Greene 8 March 2023 8 March 2026
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Governance
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Annual Report on Remuneration continued
Implementation of the Directors’ Remuneration Policy in 2024
The Policy was approved at the AGM on 15 May 2023 and will continue to apply until the 2026 AGM unless changes are required.
The table below summarises the key features of the Policy and how we plan to implement it in 2024/25. Full details of the Policy
can be found under the Shareholder Hub section of our website.
Element of
remuneration
Key features of Policy Implementation in 2024
Salary
An executive director’s base salary is set on appointment
and reviewed annually or when there is a change in position
or responsibility.
When determining an appropriate level of base salary, the
Committee considers:
– pay increases for other colleagues;
– remuneration practices within the Group;
– any change in scope, role and responsibilities;
– the general performance of the Group and each individual;
– the experience of the relevant director; and
– the economic environment.
No salary increases to 2023 salaries for CEO or CFO.
Ian McLaughlin
2024: £725,000
2023: £725,000
Dave Watts
2024: £550,000
2023: £550,000
Malcolm Le May
1
2024: £749,700
2023: £749,700
Neeraj Kapur
2
2024: £551,250
2023: £551,250
Benefits
Benefits include market standard benefits. Transitionary temporary travel allowance for Ian McLaughlin
only. £100,000 per annum and expires on 26 July 2025.
Role-based
allowance
(RBA)
RBA of 0% of base salary (for all EDs).
RBA of 15% of base salary (Malcolm Le May).
RBAs are non-pensionable and will be released in equal
instalments over three years in the form of shares.
The maximum annual value of an RBA grant for an individual
is 25% of base salary.
No change from 2023.
This applies to the previous CEO (Malcolm Le May) only and
will cease on his retirement on 24 January 2024.
Pension
The Company provides a pension contribution allowance
that is fair, competitive and in line with corporate governance
best practice.
No change from 2023.
CEO and CFO: 10% of salary.
10% is the norm for the Group’s Pension Plan.
Annual bonus
The Committee will determine the maximum annual
participation in the Annual Bonus Plan for each year, which
will not exceed 150% of base salary.
The Annual Bonus Plan is based on a mix of financial and
strategic/operational conditions and is measured over a
period of one financial year.
The financial measures will account for no less than 50% of
the bonus opportunity.
There is no change from 2023 to the overall approach and
percentage.
Maximum opportunity:
– CEO:
– Ian McLaughlin: 150% of salary.
– Malcolm Le May: Not eligible for a bonus for performance
year 2024.
– CFO: 125% of salary.
– Dave Watts: 125% of salary.
– Neeraj Kapur: Not eligible for a bonus for performance
year 2024.
Measures:
Financial performance measures to be changed for 2024:
– adjusted PBT (25%);
– adjusted ROTE (25%); and
– cost:income ratio (10%).
40% non-financial will align to the 2024 North Star strategy.
In addition, there is a risk overlay and Tier 1 capital ratio gateway.
Deferral:
At least 40% of the bonus is deferred, vesting pro-rata over
three years, in Company shares.
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Element of
remuneration
Key features of Policy Implementation in 2024
Restricted
Share
Plan (RSP)
Awards are granted annually to executive directors in the form
of conditional awards or options. Awards vest at the end of a
three-year period subject to:
– the executive director’s continued employment at the date
of vesting; and
– the satisfaction of an underpin as determined by the
Committee whereby the Committee can adjust vesting for
business, individual and wider Company performance.
A two-year holding period will apply following the
three-year vesting period for all awards granted to the
executive directors.
Upon vesting, sufficient shares may be sold to pay tax on
the shares.
Change from 2023.
The current CFO (Dave Watts) has an RSP opportunity of 75%
of salary, which is lower than the previous CFO (100%). As part
of his joining package, the Committee agreed that for RSP
2024 only, the RSP award will be 100% of salary.
The RSP 2023 grant for previous CEO (Malcolm Le May) will be
pro-rated for time to the Termination Date in 2024 (rounded
up to the next whole year) as permitted by the RSP rules and
the Policy.
The 2023 grant made for previous CFO (Neeraj Kapur) will be
pro-rated for time to the Termination Date in 2024 (rounded
up to the next whole year) as permitted by the RSP rules and
the Policy.
Shareholding
requirements
Normal shareholding requirement of 200% of salary.
Additional requirement to hold 200% of salary for two years
following cessation of employment.
Executive directors have agreed to be bound by the
terms of the requirements and Company Secretariat will
monitor compliance.
No change from 2023.
The previous executive directors (Malcolm Le May and
Neeraj Kapur) will remain subject to the post-employment
shareholding requirements in line with the Policy.
Malus
and clawback
Standard market practice (and regulatory requirements)
malus and clawback provisions as at the time the Policy
was adopted.
No change from 2023.
Chair
and NED fees
Provides a competitive level of fees to support recruitment
and retention of a Chairman (and NEDs) with the necessary
experience to advise, and assist, the executives with establishing
and monitoring the Group’s strategic objectives.
Change from 2023.
The fee levels as at 1 January 2024 for the Chairman and NEDs
are as below. These reflect, in aggregate, a c.20% decrease
from 2023 levels.
1 Malcolm Le May left the Company on 24 January 2024.
2 Neeraj Kapur left the Company on 23 February 2024.
NED fees for 2024
Both NED fees and the Chairman fees were last reviewed by the Board and Committee in December 2022. Since then, there
has been significant change in VBG’s market capitalisation which led to a fall in ranking below the FTSE 250. In line with the
requirement to review all aspects of the business to ensure it is sustainable and develops a platform for renewed growth, it
was felt that the Board should set the ‘tone from the top’ regarding its fees, set against the backdrop of large-scale reductions
in headcount and significant cost containment programmes. The Committee and Board reviewed a benchmarking exercise
undertaken by the independent remuneration advisors (PwC) and after careful consideration given to the size and complexity of
the organisation, as well as ensuring the ability to retain and attract any future incumbents, a decision was made to reduce the
fees for all NEDs and the Chairman as shown below.
2024 2023 % change
Chairman of the Board £275,000 £336,000 -18%
Board fee
1
£70,000 £71,400 -2%
Senior Independent Director £15,000 £15,750 -5%
Committee Chair £20,000 £25,000 -20%
Committee members
2
£5,000 £15,750 -68%
1 Board fee covers all duties, including service on the VBG and VBL Nomination Committees (NomCo) or Company subsidiaries.
2 In 2023 this was a flat fee of £15,750 irrespective of the number of committee memberships. In 2024 a fee of £5,000 will be paid per committee membership
(excluding NomCo and excluding where the NED is a Chair).
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Annual Report on Remuneration continued
Additional remuneration disclosures
Our approach to fairness and wider workforce considerations
This section of the report brings visibility of remuneration across the entire workforce together in one place. In this section, we
provide context to our director pay by explaining our colleague policies and our approach to fairness, including the following:
– the report received by the Committee on wider workforce pay policies and whether the approach to executive remuneration
is consistent and the alignment of the incentives operated by the Company with its culture and strategy;
– general pay and conditions in the Group;
– gender diversity and pay gap; and
– comparison metrics on executive and colleague remuneration.
In order for the Committee to carry out its oversight review of wider workforce pay, policies and incentives, the Committee
receives a report annually from the Group setting out key details of remuneration throughout the Group.
Details of the information reviewed by the Committee and findings are set out below.
Overview of workforce remuneration and the Committee’s review
The table illustrates how the Remuneration Policy for executive directors in 2023 cascaded throughout the colleague population.
% of
workforce
Average
increase
in base
salaries
1
Variable pay
2
Share
plans
3
Pension
4
Benefits
5
Colleague group
Commission
schemes
Annual
bonus
Executive directors 0.3% 0.0% No All Yes Yes Yes
Senior management 3.5% 6.9% No All Yes Yes Yes
Management 24.1% 9.0% No All Yes Yes Yes
All other colleagues 72.1% 10.3% No All Yes Yes Yes
1 Base salaries:
– Base salaries are market competitive and determined with reference to role type, location, responsibility (level), experience and market practice.
– Annual salary increases are applied on an equitable and objective basis dependent on role type.
– Includes 2023 pay review and compares 31 December 2022 with 31 December 2023 data.
2 Variable pay:
– In line with our approach to executive director remuneration, a proportion of the remuneration for the wider workforce is in the form of variable pay, linked to the
achievement of stretching targets that align with the Company’s strategic goals.
– All colleagues are eligible for variable pay provided they have joined before 1 October of the previous performance year, are performing satisfactorily, and are not
under notice of termination. Variable pay is linked to the Group’s performance in the form of annual bonuses. Variable pay is determined with reference to financial
performance and/or the achievement of non-financial objectives which are aligned to the Group’s strategic priorities.
3 Share plans:
– Only some management, and all senior management and executive directors participate in the RSP.
– Historically, participation in the long-term incentive schemes has been limited since the Group’s variable pay arrangements provide the strong linkage
between workforce remuneration and the Group’s financial performance and/or strategic priorities.
– All colleagues have access to share ownership schemes (SAYE (an all-employee plan enabling colleagues to save monthly and receive an option to
purchase Group shares at a discount following a minimum of three years) and SIP (an all-employee plan enabling the colleagues to purchase Group
shares on a monthly basis out of deductions from salaries, also receiving some Matching Awards from the Group)).
4 Pension:
– Maximum employer contributions are consistent across the Group (maximum 10% employer contribution for the Group DC arrangements), with minor
deviations appropriate for role type or for historical reasons which will be addressed in 2024. There also exists a NEST pension arrangement.
5 Benefits:
– Consistent approach applied and determined with reference to role type, market practice and seniority.
The levels of remuneration and the types offered will vary across the Company depending on a colleague’s location, level of
seniority and role. The Committee is not looking for a homogeneous approach; when conducting its review, it is paying particular
attention to:
– whether the element of remuneration is consistent with the Company’s remuneration principles;
– if there are differences, whether they are appropriate; and
– whether the approach is fair and equitable in the context of other colleagues.
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The key findings of the Committee’s review for 2023 have been set out in the following table.
Element Findings
Salary
Average salary increases for colleagues across the Company are being applied on an equitable and objective basis.
All colleagues, whatever their age, are paid above the National Living Wage (on a full time basis).
Incentives
All of our colleagues have the ability to share in the success of the Company through incentive compensation in the
form of variable pay linked to performance.
Shareholding
requirements
Executive directors are required to adhere to minimum shareholding guidelines.
Pensions
All colleagues are eligible for enrolment in a defined contribution pension arrangement and work is planned for 2024
to bring all colleagues onto the same pension provider and the same terms and conditions across the Group.
Benefits
Benefits are offered according to the level of seniority of the role in line with market practice and Policy. Our bespoke
benefits offering is broadly in line with similar companies but the Committee acknowledges the market shift to a
‘flexible benefits’ offering; this remains under review.
The Committee is satisfied that the approach to remuneration across the Company is broadly consistent with the Company’s
principles of remuneration and the pay. Further, in the Committee’s opinion the approach to executive remuneration aligns with
the wider Group Remuneration Policy and there are no anomalies specific to the executive directors that are outside of Policy.
Communication and engagement with colleagues
The Board is committed to ensuring there is an open dialogue with our colleagues and the Committee has the authority to ask
for additional information from the Company in order to carry out its responsibilities.
The Colleague Forum is an established arrangement to facilitate effective engagement between the Board and the workforce
and to encourage workforce participation in shaping strategic initiatives and seek views on key decisions. It supports the Group
in satisfying Provision 5 of the UK Corporate Governance Code 2018, as well as capturing meaningful input and feedback from
colleagues.
Our Colleague Forum has colleague representatives from across all areas and all levels of the business and meets quarterly.
The Designated Non-Executive Colleague Champion works closely with the Colleague Forum in his capacity as engagement
sponsor on behalf of the Board to agree a rhythm of dialogue and meeting attendance to further cement the link between the
Colleague Forum and the Board.
Alongside the Colleague Forum, we commission an annual Colleague Engagement Survey, which is independently administered
by Great Place To Work, as a channel for colleague voice and feedback. The output from each Colleague Engagement Survey
is reviewed by the CCE Committee and appropriate actions are taken in response to any findings.
This is the third year that a consistent performance management framework was used fully across the Group to assess
colleagues’ performance and determine bonus allocations in line with the Group’s values. Work has continued on harmonising
pay and benefits opportunities for equivalent roles across all areas of the business through the Reward Framework and the
alignment of pension schemes across the Group will be completed in 2024. Group-wide job levels have also been rolled out to
help drive consistency and create a more unified colleague experience and support talent mobility. We have also published the
minimum pay levels by level and location in our move to greater pay transparency.
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Annual Report on Remuneration continued
Additional remuneration disclosures continued
Living Wage, equal opportunities and diversity initiatives
A summary of the Company’s general policies in relation to Living Wage, equal opportunities and diversity initiatives are as follows:
Policy Description
Living Wage employer
The National Living Wage is the amount of money all colleagues aged over 25 are legally entitled to. Our policy is to
ensure that all colleagues, whatever their age, are paid above the National Living Wage.
Equal opportunities
and diversity
initiatives
Our Company is committed to equal opportunities in all aspects of employment, including recruitment, training,
performance review and promotions. We make decisions based on objective criteria and individual merit, ensuring
fairness, and respect, and minimising bias. We value diversity and utilise everyone’s talents, abilities and lived
experiences. As part of our commitment, we have signed up to the Women in Finance Charter and are actively working
towards becoming a Disability Confident business. We encourage continuous development and training by offering
a variety of learning opportunities that cater to the diverse learning styles of our colleagues. In 2023, we adopted a
data-driven approach to improve the quality of our diversity data and analysis. This has allowed us to set gender
diversity targets at a more gradual level, leveraging performance management data to identify key talent and
emerging leaders, and challenge recruitment processes to ensure inclusive management appointments. Additionally,
we have established partnerships with membership organisations to stay up to date with industry standards and align
our policies and processes with best practices. Through collaboration, we can continuously improve our approach to
inclusion, diversity and wellbeing, to create an inclusive and supportive workplace for all.
Further details are provided in the CCE Committee Report on pages 78 and 79.
Gender pay gap
We feel strongly about the importance of having a workforce which represents the customers we serve. We hire from diverse
backgrounds, employing (as at 31 December 2023) 51.7% men and 48.3% women across our business, and our recruitment
policies, salary and bonus structures are designed to be gender neutral.
The Group recognises that the key driver behind both our hourly rate and bonus gap is a higher proportion of male colleagues
in senior roles, and so we continue to remain focused on initiatives to increase female representation at senior management
and leadership level.
The introduction of job levelling and a consistent reward framework means that we are better able to evidence that across
the Group male and female colleagues are treated fairly. Whilst the gender pay gap has improved in 2023 at a Group level,
there is still further improvement needed, and our key focus to address this is increasing female representation in senior roles.
This is evidenced further by our commitment to the Women in Finance Charter.
The Group Gender Pay Gap reports which are communicated internally to our colleagues can also be found on our website.
CEO pay ratio
For the purposes of calculating the CEO pay ratio, we have used Option A, which takes into consideration the full-time equivalent
basis of all UK employees and provides representative results of the employee pay conditions across the Company. For 2023
the CEO pay used in these calculations are the pro-rated blend of remuneration of the current CEO (Ian McLaughlin) and
previous CEO (Malcolm Le May). The table shows that the CEO pay ratio has been improving (i.e. decreasing) since 2021. The main
reasons for this are: (1) no salary increase for the CEO since 2022, (2) salary review in 2023 focused on the lower paid population
(and again in 2024), and (3) structural changes made to the business.
The volatility in this ratio is caused by the fact that the CEO pay is made up of a higher proportion of incentive pay than that
of our colleagues, in line with the expectations of our shareholders. This introduces a higher degree of variability in his pay
each year which affects the ratio.
In order to normalise the impact to year-on-year changes to short and long-term incentive payments, the information also
shows the normalised CEO pay ratio when ‘on-target’ bonus payouts are used in the calculation. In assessing our pay ratio
versus likely ratios from industry peers with a similar headcount, we believe that we are comparable but note that annual and
long-term incentive payments have varied considerably amongst this group. We also recognise that ratios will be influenced
by levels of colleague pay and, in the sector, colleague pay will be lower than in many other sectors of the economy.
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Year
25th
percentile
pay ratio
Median
pay ratio
75th
percentile
pay ratio
2023 (actual) Option A 34.7:1 23.8:1 13.1:1
2022 (actual)* Option A 55.1:1 36.7:1 20.3:1
2021 (actual) Option B 79.6:1 66.3:1 44.1:1
2020 (actual) Option B 28.9:1 26.9:1 21.3:1
2023 (incl. target bonus) Option A 56:1 37.3:1 20.7:1
2022 (incl. target bonus)
1
Option A 60.1:1 44.2:1 24.2:1
2021 (incl. target bonus) Option B 64.5:1 53.8:1 36.8:1
2020 (incl. target bonus) Option B 55.8:1 51.8:1 41.0:1
1 Restated (downwards) for 2022 due to single figure of remuneration for 2022 being reduced as a result of the downwards adjustment to the CEO’s RSP 2020
which vested on 9 November 2023.
Base salary and total pay and benefits for CEO and colleague percentiles
2023
Base salary (£’000) 749.0
Total pay and benefits (£’000) 943.8
Colleague headcount at 31 December 2023 1,494
Base salary (£’000)
Colleague at the 25th percentile 26.2
Colleague at the 50th percentile 37.0
Colleague at the 75th percentile 64.8
Total pay and benefits (£’000)
Colleague at the 25th percentile 27.2
Colleague at the 50th percentile 39.7
Colleague at the 75th percentile 71.8
Total remuneration for each colleague was calculated on a full-time equivalent basis and the lower quartile, median and
upper quartile colleagues were identified as at 31 December 2023. Overall annualised pay was compared to the pro-rated
blend of remuneration of the current CEO (Ian McLaughlin) and previous CEO (Malcolm Le May). Colleague total remuneration
includes: basic salary, pension, maternity/paternity pay, annual cash bonus and benefits. The total remuneration for the relevant
colleagues was compared to that of the CEO.
The Company believes that the median pay ratio for 2023 is consistent with the pay, reward and progression policies for the
Company’s colleagues. We also considered the pay composition of the colleagues who represent the median, lower and upper
quartiles and were comfortable that it fairly represents pay in the Company.
Vanquis Banking Group plc Annual Report and Accounts 2023
114
Governance
Additional remuneration disclosures continued
CEO pay against total shareholder return (TSR)
The chart below shows the single figure of remuneration for our CEO over time rebased to 2013. We have also included our
TSR performance over this period against the FTSE 250, based on £100 invested. The FTSE 250 was chosen as, in the opinion
of the Committee, the size and complexity of the Company make this an appropriate basis for comparison.
Pay performance: TSR chart
0
Value (£) (rebased)
Vanquis Banking Group plc FTSE 250 (excl. investment trusts) CEO pay
Dec 20Dec 19Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 21
100
150
50
200
250
Dec 22 Dec 23
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
CEO
1
PC PC PC PC MLM MLM MLM MLM MLM MLM MLM IM
CEO single figure
of remuneration
(£’000) 6,594 7,500 6,315 962 71 1,387 1,507 818 1,972 2,056
2
551 393
Annual bonus/
earning
(% of maximum) 100 98 100 — — 69 53 — 96 78 — —
LTIS/RSP vesting
(% of maximum) 100 100 100 — — — — — — 65
3
75
4
n/a
1 Peter Crook (PC), Malcolm Le May (MLM), Ian McLaughlin (IM).
2 Single figure of remuneration for 2022 has been restated (see 3 below).
3 The RSP 2020 award (which formed part of the CEO single figure of remuneration for 2022) is restated to reflect the 35% downwards adjustment applied
in November 2023.
4 The RSP 2021 award (which forms part of the CEO single figure of remuneration for 2023) reflects a 25% downwards adjustment as determined as part
of the interim assessment of the RSP 2021 award performance underpin.
The greater volatility of our CEO pay is due to the higher proportion of incentive pay in his package compared with that of
our colleagues, which introduces a higher degree of variability in his pay each year versus colleagues.
Directors’ Remuneration Report continued
Annual Report on Remuneration continued
Vanquis Banking Group plc Annual Report and Accounts 2023
115
Governance Financial statementsStrategic Report Shareholder information
Percentage change in directors’ and colleagues’ remuneration
The Committee monitors the changes year on year between our directors’ pay and average colleague pay. As per our Policy,
salary increases applied to executive directors will typically be in line with those of the wider workforce. In accordance with
The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the table below shows
the percentage change from this financial year to previous financial year in executive director and NED total remuneration
compared to the change for the average of the percentage change for colleagues within the Company. The comparator
group is based on all colleagues.
Salary/fees Taxable benefits Short-term variable pay
2023 2022 2021 2020 2023 2022 2021 2020 2023 2022 2021
1
2020
Executive directors
Ian McLaughlin n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Dave Watts n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Malcolm Le May -42%
2
5% 18% 2% -56% -6% -51% -24% -100% -15% —
1
-100%
Neeraj Kapur -40%
2
-9% -32% n/a -51% 17% 55% n/a -100% -8% —
1
n/a
Non-executive directors
Sir Peter Estlin n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Patrick Snowball 0% 5% -8% 0% 0% 0% -67% n/a n/a n/a n/a n/a
Andrea Blance -7% 8% 5% 0% 0% 0% -50% 0% n/a n/a n/a n/a
Elizabeth Chambers 10% 5% 1% 0% -58% 43% 0% n/a n/a n/a n/a n/a
Paul Hewitt 0% 9% 5% 0% 67% 0% 50% n/a n/a n/a n/a n/a
Margot James 0% 5% 131% n/a n/a 0% n/a n/a n/a n/a n/a n/a
Angela Knight 0% 9% 2% 0% n/a 0% n/a n/a n/a n/a n/a n/a
Graham Lindsay 0% 9% 8% 0% -60% 150% -50% n/a n/a n/a n/a n/a
Michele Greene n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Average colleague 10% 8% 3% 4% 14% 59% 0% 7% -100% -5% —
1
-54%
1 No bonus was paid in 2020 and therefore there is no meaningful comparison with 2021.
2 Reflects proration for time as executive director in 2023.
All data rounded to the nearest whole percent.
Graham Lindsay
Remuneration Committee Chair
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
116
Financial statements
Independent auditor’s report to the members of Vanquis Banking Group plc
Report on the audit of the financial statements
1. Opinion
In our opinion:
– the financial statements of Vanquis Banking Group plc
(the ‘parent company’) and its subsidiaries (the ‘Group’)
give a true and fair view of the state of the Group’s and of
the parent company’s affairs as at 31 December 2023 and
of the Group’s loss for the year then ended;
– the Group financial statements have been properly
prepared in accordance with United Kingdom adopted
international accounting standards);
– the parent company financial statements have been
properly prepared in accordance with United Kingdom
adopted international accounting standards and
as applied in accordance with the provisions of the
Companies Act 2006; and
– the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements which comprise:
– the consolidated income statement;
– the consolidated statement of comprehensive income;
– the consolidated and parent company balance sheets;
– the consolidated and parent company statements
of changes in equity;
– the consolidated cash flow statement;
– the statement of accounting policies; and
– the related notes 1 to 37.
The financial reporting framework that has been applied
in their preparation is applicable law and United Kingdom
adopted international accounting standards , and with
regards to the parent company financial statements,
as applied in accordance with the provisions of the
Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described
in the auditor’s responsibilities for the audit of the financial
statements section of our report.
We are independent of the Group and the parent company in
accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including
the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard
as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services provided to the
Group and parent company for the year are disclosed in
note 6 to the financial statements. We confirm that we have
not provided any non-audit services prohibited by the FRC’s
Ethical Standard to the Group or the parent company.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current
year were:
– the estimation of expected credit losses in Credit Cards
and Vehicle Finance; and
– the valuation of the pension obligation
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the Group and parent company financial statements was £5.83m and £5.53m
respectively which was determined on the basis of 1% of net assets, with the parent company materiality being capped
at 95% of Group materiality.
Scoping
The Group has moved from three operating segments to five for the current year, being: Credit Cards, Personal Loans,
Vehicle Finance, Second charge mortgages and Snoop. There is also the Corporate Centre, which includes Operations,
Technology & Change, and support Functions which collectively serve the needs of the wider Group.
Therefore, our Group audit scope focused on Credit Cards, Personal Loans, Vehicle Finance, Second charge mortgages
and Snoop, which, together with the parent and corporate centre entities, account for 100% of the Group’s net assets.
Significant
changes in
our approach
No significant changes in our audit approach in the current year.
Vanquis Banking Group plc Annual Report and Accounts 2023
117
Governance Financial statementsStrategic Report Shareholder information
Report on the audit of the financial statements continued
4. Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern
basis of accounting included:
– Obtaining an understanding of relevant controls around management’s going concern assessment and the forecasting
process at both a divisional and Group level;
– evaluating management’s going concern assessment, which includes stress testing and point of non-viability (‘PONV’)
analysis as well as consideration of the transformation projects ongoing across the Group, in order to understand, challenge
and assess the key judgements made by management;
– reading correspondence with regulators to understand the capital and liquidity requirements imposed on the Group by the
Prudential Regulation Authority (‘PRA’), and evaluating any changes to those requirements;
– reviewing the most recent Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy
Assessment Process (ILAAP), with support from our prudential regulation specialists, and assess management’s capital
and liquidity projections and stress testing, evaluating key assumptions and methods used in the capital and liquidity stress
testing models;
– assessing and evaluating the forecasts, with support from our prudential regulation specialists including reconciliation
of the opening capital and liquidity ratios to the year-end Common Reporting Framework regulatory submissions and
assessing whether the year-end balance sheet within the model was consistent with the audited position;
– challenging the cash flow forecast assumptions within the Group’s corporate plan, which was updated in 1Q24 to capture
latest outer year projections, including key growth rate assumptions through a review of their budgeted cash flows and the
return to PBT in future periods. We have also performed an assessment over the forecasting accuracy in the previous years;
– challenging the availability and effectiveness of mitigating actions which could be taken by management to avoid
or reduce the impact of macroeconomic stress for example restricting variable pay, reducing lending growth, and/or
challenging the dividend pay-out; and
– reviewing the financial statement disclosures in respect of going concern and considering whether they are consistent with
the knowledge we obtained during the course of the audit.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the Group’s and parent company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not
due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
5.1. Estimation of expected credit losses in Credit Cards and Vehicle Finance
Key audit matter
description
The Group holds portfolios of receivables from credit card, personal loans and vehicle financing arrangements, totalling
£2,175.1m (2022 (restated): £1,913.3m), net of provisions. The Group’s provision for impairment against amounts receivable
from customers is £565.8m (2022: £605.8m).
Within Credit Cards, management has recognised a total ECL provision of £198.7m (2022: £270.4m) on gross receivables
of £1,476.4m (2022: £1,452.0m), representing a decline in ECL coverage ratio from 18.6% to 13.5% over the period.
Within Vehicle Finance, management has recognised a total ECL provision of £352.0m (2022 (restated): £316.9m) on
gross receivables of £1,144.2m (2022 (restated): £972.3m), representing an improvement in ECL coverage ratio from 33.6%
to 30.8% over the period.
The IFRS 9 Financial Instruments expected credit losses on amounts receivable from customers are determined
by modelling expected credit performance of the receivables’ portfolios. The underlying modelling techniques are
complex and involve significant judgements regarding the quantum and timing of expected future cash flows to
calculate expected credit losses. Given the material impact of the significant judgements involved, we also consider
there is a risk of fraud due to the potential ability of management to introduce inappropriate bias to judgements made
in the estimation process.
Vanquis Banking Group plc Annual Report and Accounts 2023
118
Financial statements
Report on the audit of the financial statements continued
5. Key audit matters continued
5.1. Estimation of expected credit losses in Credit Cards and Vehicle Finance
continued
Key audit matter
description
continued
IFRS 9 requires that an impairment assessment should be the best estimate of expected credit losses and that
reasonable forward-looking information should be incorporated into the calculation as at the balance sheet date.
The uncertainties in the macroeconomic environment and inflationary pressures, mean there exists a wide range of
scenarios with different loss outcomes. The key economic variables relevant for the Group’s portfolio were determined
to be the hazard rate, which is the likelihood of shifting from employment to unemployment in a given time period, and
debt-to-income (‘DTI’) ratios. The hazard rate is not a widely used variable for which forecasts are published; however,
there is a strong correlation between hazard rates and unemployment such that hazard rates can be predicted based
on unemployment forecasts. There is significant judgement in determining the probability weighting of the scenarios
adopted by management and the associated assumptions.
The expected credit loss provision estimate is driven by account-specific estimation of probability of default (PD),
exposure at default (EAD) and loss given default (LGD) which represent the key areas of judgement. Across both
Credit Cards and Vehicle Finance, we have pinpointed our significant risk to the macroeconomic inputs including
the cost-of-living overlays and the valuation of the underlay recognised from the ongoing refinement of the IFRS9
impairment models, which are expected to be fully implemented in H1 2024.
Management has released its cost-of-living overlays (2022: £10.5m) as management consider that underlying
asset quality remained high with delinquency trends remaining stable. The Post Model Adjustments (‘PMA‘) were
based on management’s judgement in light of the current economic environment and were supported by scenario
modelling techniques.
Management has conducted model redevelopment and calibration activities during the year and recognised an
underlay of £57.7m from the ongoing refinement of the IFRS 9 impairment models. Due to the complexity of the calculation
and underlying assumptions, and high level of judgement involved in the refinement of the IFRS 9 impairment models to
recognise the underlay, we have identified management’s expert credit judgements in determining the valuation of the
underlay as a key audit matter for this year.
We no longer consider the significant changes in credit risk (‘SICR’) thresholds and 12-month probability of default
(‘12m PD’) recalibration in Credit Cards to be a key audit matter as these assumptions have been revised as part of the
wider model redevelopment and calibration activities carried out during the year.
Further detail in respect of these is set out in the statement of accounting policies in page 131 and 134, in the amounts
receivables from customers in note 13 of the financial statements and also within the Strategic Report in page 33.
How the scope
of our audit
responded to the
key audit matter
Control procedures
Within Credit Cards and Vehicle Finance we obtained an understanding of relevant controls relating to the identification,
valuation and recording of expected credit losses.
Substantive procedures
In respect of the macroeconomic scenarios applied we involved our economics specialist to assess the appropriateness
of the shape of the hazard rate and DTI curves and the respective weightings attached to the curves, whilst also testing
the underlying data used in this assessment for completeness and accuracy.
We benchmarked the underlying unemployment economic variables against various external sources including
His Majesty’s Treasury forecasts, the Prudential Regulation Authority, the Office for National Statistics, and other
available data.
We involved our credit risk modelling specialists to assist in our assessment and challenge of management’s
incumbent and new model methodology and assessed the methodology for Credit Cards and Vehicle Finance against
the requirements of IFRS 9. In performing these procedures, we further considered whether there were any indicators
of bias in the methodology applied by management or in the estimation of the amount and timing of expected future
cash flows, through a stand back assessment performed on the ECL coverage ratios derived from the models, post the
application of the underlay.
In respect of the cost-of-living PMA for Credit Cards and Vehicle Finance, with the involvement of our credit risk modelling
specialists, we have assessed the appropriateness of the reversal of the cost-of-living PMA through our evaluation of the
refinement of the macro model and assessment of the appropriateness of the underlay recognised on the impact of
such refinement.
In respect of the underlay from the benefit of the ongoing model refinement with the involvement of our credit risk
modelling specialists, we have tested that the methodology changes have been reflected in the creation of the underlay
through assessment of the underlying scripts, tested the completeness and accuracy of the data used to form the
new models and evaluated management’s conclusions regarding the appropriateness of the changes in the current
macroeconomic environment.
Key observations
We considered the macroeconomic assumptions and weightings to be reasonable in both Credit Cards and Vehicle
Finance. Appropriate methodologies, management expert credit judgement and reasonable assumptions were used
in the valuation of the underlay from the benefit of the ongoing model refinement and in determining the reversal of the
cost-of-living. Overall, based on our substantive testing, we found that the provision for expected credit losses in Credit
Cards and Vehicle Finance is appropriate.
Independent auditor’s report to the members of Vanquis Banking Group plc continued
Vanquis Banking Group plc Annual Report and Accounts 2023
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Governance Financial statementsStrategic Report Shareholder information
5.2. Valuation of the Pension Obligation
Key audit matter
description
Under IAS 19 ‘Employee Benefits’, the value of the defined benefit pension scheme is to be recognised on the Group’s
balance sheet, reflecting an actuarial valuation of the assets and liabilities of the scheme at the balance sheet date.
The valuation of the pension obligation involves judgements in relation to inflation, discount and mortality rates. The
most critical element identified was the discount rate assumption as set out in the sensitivity analysis in note 22. The
valuation of the pension obligation is an area of management judgement where there is a risk of fraud due to the
potential ability of management to introduce inappropriate bias to judgements made in the valuation process.
The pension obligation is £474.7m as at 31 December 2023 (2022: £490.0m). The pension surplus held on the balance
sheet has increased by £7.5m to £38.2m at 31 December 2023 (31 December 2022: £30.7m). Further detail in respect
of these assumptions is set out in the statement of accounting policies on Page 133 of the financial statements, the
retirement benefit asset in note 22 in the financial statements and within the Audit Committee Report page 83.
How the scope
of our audit
responded to the
key audit matter
We obtained an understanding of the relevant controls surrounding the determination of the discount rate and other
inputs used in the pension valuation.
We involved our actuarial specialists to assist us in evaluating the appropriateness of the principal actuarial
assumptions used in the calculation of the pension obligation being the discount rate, mortality rates and inflation
rates. We also challenged and benchmarked management’s assumptions against those used by a range of
organisations as at 31 December 2023 and considered the consistency of those judgements compared with the
prior year.
Key observations
All assumptions adopted by management are within what we considered to be an acceptable range.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the
scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements Parent company financial statements
Materiality
£5.83m (2022: £6.07m) £5.53m (2022: £5.76m)
Basis for
determining
materiality
1% of net assets (2022: 1% of net assets) 1% of net assets (2022: 1% of net assets) capped at 95%
of Group materiality
Rationale for
the benchmark
applied
Our benchmark upon which materiality is determined is consistent with the prior period. We determined that net assets
continue to be a more stable and relevant measure used by investors, regulators and stakeholders when assessing the
performance and longer-term prospects of the Group and parent company as well as the importance of net assets to the
Group’s regulatory capital position.
Group materiality
£5.8m
Net assets
£583.1m
Component
materiality range
£0.0m to £5.5m
Audit Committee
reporting threshold
£0.3m
Net Assets Group materiality
Report on the audit of the financial statements continued
5. Key audit matters continued
Vanquis Banking Group plc Annual Report and Accounts 2023
120
Financial statements
Report on the audit of the financial statements continued
6. Our application of materiality continued
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected
and undetected misstatements exceed the materiality for the financial statements as a whole.
Group financial statements Parent company financial statements
Performance
materiality
70% (2022: 70%) of Group materiality 70% (2022: 70%) of parent company materiality
Basis and
rationale for
determining
performance
materiality
In determining performance materiality, we considered a number of factors, including: our understanding of the
control environment and controls reliance obtained, our understanding of the business, and the number of uncorrected
misstatements identified in the prior year.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £0.29m (2022: £0.30m),
as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
The Group is organised into five continuing operating segments: Credit Cards, Personal Loans, Vehicle Finance, Second charge
mortgages and Snoop. There is also the Corporate Centre, which includes Operations, Technology & Change, and support
Functions which collectively serve the needs of the wider Group.
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls,
and assessing the risks of material misstatement at the Group level. Therefore, our Group audit scope focused on Credit Cards,
Personal Loans, Vehicle Finance, Second charge mortgages and Snoop, which, together with the parent company and corporate
centre entities, account for 100% of the Group’s net assets. Credit Cards, Personal Loans and Vehicle Finance are audited by
separate engagement teams led by the Group audit partner.
7.2. Our consideration of the control environment
We identified the financial reporting, lending, and deposit business cycles to be the most relevant to the audit, including the
identification, valuation and recording of expected credit losses. We planned a controls reliance auditing strategy over the
credit card and retail deposit cycles. Due to issues identified by our IT specialists in respect of user access review over the credit
card system, we modified our audit approach to a fully substantive approach and did not place reliance on IT controls. This
increased the extent of our substantive audit procedures over these balances and, in some areas, also altered the nature of our
substantive procedures. This has been discussed within the Audit Committee Report set out on page 82.
We were however able to take a controls reliance approach over the deposit business cycle and with involvement of our IT
specialists we tested and relied upon IT controls across the aforementioned deposit system identified. The Group outsources
the processing of customer deposits to a third party and therefore, we involved our IT specialists to review the service auditor’s
report and evaluated user entity controls.
We have also obtained an understanding of the relevant controls within the financial reporting, treasury, personal loans and
loan impairment processes.
The Audit Committee has performed their own assessment of the internal control environment as set out on page 82.
7.3. Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its financial
statements throughout the planning of our audit.
The Group continues to develop its assessment of the potential impacts of climate change which is currently being considered
over the short term (zero to one years), medium term (one to five years) and long term (five or more years) time horizons which is
reported on page 20 of the Strategic report.
As part of our audit, we have obtained management’s climate-related risk assessment and held enquiries with the Head
of Sustainability, the Chief Risk Officer and Finance team to understand the process of identifying climate-related risks, the
determination of mitigating actions and the impact on the Group’s financial statements. Management has identified there to
be no material impact arising from climate change on the judgements and estimates made in the financial statements as
explained in the statement of accounting policies disclosure on page 25.
We performed our own qualitative and quantitative risk assessment of the potential impact of climate change material
misstatement. Our procedures included reading disclosures included in the Strategic Report with the involvement of our climate
change and sustainability specialists and audit team consideration as to whether they are materially consistent with the
financial statements and our knowledge obtained in the audit. We also evaluated whether appropriate disclosures have been
made in the financial statements.
Independent auditor’s report to the members of Vanquis Banking Group plc continued
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Report on the audit of the financial statements continued
8. Other information
The other information comprises the information included in the Annual Report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the Annual Report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements, or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the parent company or to cease operations, or have
no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance
with laws and regulations, we considered the following:
– the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;
– the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved
by the board;
– results of our enquiries of management, the directors and the Audit Committee about their own identification and
assessment of the risks of irregularities, including those that are specific to the Group’s sector;
– any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures
relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances
of non-compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or
alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
– the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations,
pensions, financial instruments, share-based payments, data analytics, information technology, prudential regulatory,
climate change and sustainability specialists, macroeconomic and credit risk modelling specialists, regarding how and
where fraud might occur in the financial statements and any potential indicators of fraud.
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Financial statements
Report on the audit of the financial statements continued
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
continued
11.1. Identifying and assessing potential risks related to irregularities continued
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud
and identified the greatest potential for fraud in the following areas: the estimation of expected credit losses in Credit Cards
and Vehicle Finance and valuation of the pension obligation. In common with all audits under ISAs (UK), we are also required to
perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules, pension
legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements
but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included
the regulation set by the Financial Conduct Authority and the Prudential Regulation Authority relating to the Group’s regulatory
capital and liquidity requirements.
11.2. Audit response to risks identified
As a result of performing the above, we identified the estimation of expected credit losses in Credit Cards and Vehicle Finance
and valuation of the pension obligation as key audit matters related to the potential risk of fraud. The key audit matters section
of our report explains the matters in more detail and also describes the specific procedures we performed in response to those
key audit matters.
In addition to the above, our procedures to respond to risks identified included the following:
– reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with
provisions of relevant laws and regulations described as having a direct effect on the financial statements;
– enquiring of management, the Audit Committee and in-house legal counsel concerning actual and potential litigation
and claims;
– performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
– reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing
correspondence with regulatory bodies such as the Prudential Regulation Authority, the Financial Conduct
Authority and HMRC;
– in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential
bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course
of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with
the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
– the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
– the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the
course of the audit, we have not identified any material misstatements in the Strategic Report or the Directors’ Report.
Independent auditor’s report to the members of Vanquis Banking Group plc continued
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Governance Financial statementsStrategic Report Shareholder information
Report on other legal and regulatory requirements continued
13. Corporate Governance Statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of
the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance
Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:
– the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 92 and 129;
– the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the
period is appropriate set out on page 51;
– the directors’ statement on fair, balanced and understandable set out on page 81;
– the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on
page 84 to 85;
– the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems
set out on page 86; and
– the section describing the work of the Audit Committee set out on pages 80 to 83.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
– we have not received all the information and explanations we require for our audit; or
– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
– the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration
have not been made or the part of the Directors’ Remuneration Report to be audited is not in agreement with the accounting
records and returns.
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed by the directors on 29 June 2012 to audit the
financial statements for the year ending 31 December 2012 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 12 years, covering the years ending 31 December 2012
to 31 December 2023.
15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance
with ISAs (UK).
16. Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an Auditor’s Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.15R – DTR 4.1.18R, these
financial statements form part of the Electronic Format Annual Financial Report filed on the National Storage Mechanism of the
FCA in accordance with DTR 4.1.15R – DTR 4.1.18R. This auditor’s report provides no assurance over whether the Electronic Format
Annual Financial Report has been prepared in compliance with DTR 4.1.15R – DTR 4.1.18R.
Kieren Cooper (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Birmingham, United Kingdom
26 March 2024
Vanquis Banking Group plc Annual Report and Accounts 2023
124
Financial statements
Financial statements
Consolidated income statement
For the year ended 31 December
| Group | |||
| 2023 | 2022 | ||
Continuing operations | Note | £m | £m |
Interest income | 3 | ||
Interest expense | 4 | ( | ( |
Net interest income | |||
Fee and commission income | 5 | ||
Fee and commission expense | 5 | ( | ( |
Net fee and commission income | 5 | ||
Other income | |||
Total income | |||
Impairment charges | 13 | ( | ( |
Risk-adjusted income | |||
Operating costs | ( | ( | |
Statutory (loss)/profit before taxation from continuing operations | 1,6 | ( | |
Tax charge for continuing operations | 7 | ( | ( |
Statutory (loss)/profit after taxation from continuing operations | 1 | ( | |
Loss after taxation from discontinued operations | 2 | ( | |
Statutory (loss)/profit for the year attributable to equity shareholders | ( | ||
| Add back: | |||
Tax charge for continuing operations | 7 | ||
Amortisation of acquisition intangibles | 20 | ||
Exceptional items | 1 | ||
Loss after taxation from discontinued operations | 2 | ||
Adjusted profit before tax |
Consolidated statement of comprehensive income
For the year ended 31 December
| Group | |||
| 2023 | 2022 | ||
| Note | £m | £m | |
(Loss)/profit for the year attributable to equity shareholders | ( | ||
| Items that will not be reclassified subsequently to the income statement: | |||
– actuarial movements on retirement benefit asset | 22 | ( | |
– tax on items taken directly to other comprehensive income | 7 | ( | |
– impact of change in UK tax rate on items in other comprehensive income | 7 | ( | |
Other comprehensive income/(expense) for the year | ( | ||
Total comprehensive (expense)/income for the year | ( | ||
| (Loss)/earnings per share | |||
| For the year ended 31 December | Group | ||
| 2023 | 2022 | ||
| Note | pence | pence | |
Basic | 8 | ( | |
Diluted | 8 | ( |
The above (loss)/earnings per share is on a Group basis including discontinued operations.
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Governance Financial statementsStrategic Report Shareholder information
Dividends per share
For the year ended 31 December
| Group | |||
| 2023 | 2022 | ||
| Note | pence | pence | |
Interim dividend | 9 | ||
Final dividend | 9 |
The total cost of dividends paid in the year was £38.4m (2022: £42.8m).
Balance sheets
Group | Company | |||||
| At | At | At | At | At | ||
| 31 December | 31 December | 1 January | 31 December | 31 December | ||
| 2023 | 2022 | 2022 | 2023 | 2022 | ||
(restated) 1 | (restated) 1 | |||||
| Note | £m | £m | £m | £m | £m | |
| Assets | ||||||
Cash and cash equivalents | 12 | 14.7 | 4.1 | |||
Amounts receivable from customers | 13 | — | — | |||
Trade and other receivables | 14 | 914.9 | 1,197.9 | |||
Investments held at fair value through profit and loss | 15 | — | — | |||
Current tax asset | — | — | ||||
Property, plant and equipment | 16 | 0.7 | 0.9 | |||
Right of use assets | 17 | 10.9 | 12.7 | |||
Goodwill | 19 | — | — | |||
Other intangible assets | 20 | 1.7 | 2.3 | |||
Investment in subsidiaries | 21 | 241.6 | 207.4 | |||
Retirement benefit asset | 22 | 38.2 | 30.7 | |||
Derivative financial instruments | 23 | 1.0 | — | |||
Deferred tax assets | 24 | — | — | |||
Total assets | 1 | 1,223.7 | 1,456.0 | |||
| Liabilities and equity | ||||||
| Liabilities | ||||||
Trade and other payables | 25 | 235.4 | 304.3 | |||
Current tax liabilities | 3.1 | — | ||||
Provisions | 26 | — | 0.1 | |||
Lease liabilities | 27 | 13.6 | 16.7 | |||
Retail deposits | 28 | — | — | |||
Bank and other borrowings | 28 | 205.7 | 365.8 | |||
Derivative financial instruments | 23 | 3.0 | 15.3 | |||
Deferred tax liabilities | 24 | 7.8 | 5.3 | |||
Total liabilities | 1 | 468.6 | 707.5 | |||
| Equity attributable to owners of the parent | ||||||
Share capital | 30 | 53.2 | 52.6 | |||
Share premium | 276.3 | 273.5 | ||||
Merger reserve | 280.5 | 280.5 | ||||
Other reserves | 32 | 11.3 | 11.6 | |||
Retained earnings | ( | ( | 133.8 | 130.3 | ||
Total equity | 1 | 755.1 | 748.5 | |||
Total liabilities and equity | 1,223.7 | 1,456.0 |
1 Refer to accounting policies for detail of restatement.
In accordance with the exemption allowed by section 408 of the Companies Act 2006, the Company has not presented its
own income statement or statement of other comprehensive income. The retained profit for the financial year reported in the
financial statements of the Company was £34.5m (2022: £64.1m).
The financial statements on pages 116 to 191 were approved and authorised for issue by the Board of Directors on 26 March 2024
and signed on its behalf by:
Ian McLaughlin Dave Watts
Chief Executive Officer Chief Financial Officer
Company Number – 668987
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126
Financial statements
Statements of changes in shareholders’ equity
Group Note
| Share | Share | Merger | Other | Retained | |||
| capital | premium | reserve | reserves | earnings | Total | ||
| £m | £m | £m | £m | £m | £m | ||
At 31 December 2021 | |||||||
| Prior year adjustment | |||||||
At 1 January 2022 | |||||||
Profit for the year | |||||||
| Other comprehensive (expense)/income: | |||||||
– actuarial movements on retirement benefit asset | 22 | ( | ( | ||||
– tax on items taken directly to other comprehensive income | 7 | ||||||
– impact of change in UK tax rate | 7 | ||||||
Other comprehensive expense for the year | ( | ( | |||||
Total comprehensive income for the year | |||||||
Dividends (note 9) | ( | ( | |||||
Purchase of own shares | ( | ( | |||||
Issue of share capital | |||||||
Share-based payment charge | 31 | ||||||
| Transfer of share-based payment reserve on vesting | |||||||
of share awards | ( | ||||||
At 31 December 2022 | ( | ||||||
At 1 January 2023 | ( | ||||||
Loss for the year | ( | ( | |||||
| Other comprehensive income/(expense): | |||||||
– actuarial movements on retirement benefit asset | 22 | ||||||
– tax on items taken directly to other comprehensive income | 7 | ( | ( | ||||
– impact of change in UK tax rate | 7 | ( | ( | ||||
Other comprehensive income for the year | |||||||
Total comprehensive expense for the year | ( | ( | |||||
Dividends (note 9) | ( | ( | |||||
Issue of share capital | |||||||
Share-based payment charge | 31 | ||||||
Transfer of share-based payment reserve on vesting of share awards | ( | ||||||
At 31 December 2023 | ( |
1
1 Refer to accounting policies for detail of restatement.
The rights issue in 2018 was undertaken through a cash box structure which allowed merger relief to be applied to the issue of
shares rather than recording share premium. The full merger reserve is now considered distributable.
Other reserves are further analysed in note 32.
Financial statements continued
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Statements of changes in shareholders’ equity continued
Company Note
Share
capital
£m
Share
premium
£m
Merger
reserve
£m
Other
reserves
£m
Retained
earnings
£m
Total
£m
At 1 January 2022 52.6 273.3 280.5 9.0 171.5 786.9
Profit for the year — — — — 64.1 64.1
Other comprehensive (expense)/income:
– actuarial movements on retirement benefit asset 22 — — — — (84.2) (84.2)
– tax on items taken directly to other comprehensive
income — — — — 16.0 16.0
– impact of change in UK tax rate — — — — 5.0 5.0
Other comprehensive expense for the year — — — — (63.2) (63.2)
Total comprehensive income for the year — — — — 0.9 0.9
Dividends (note 9) — — — — (42.8) (42.8)
Purchase of own shares — — — — (0.7) (0.7)
Issue of share capital — 0.2 — — — 0.2
Share-based payment charge 31 — — — 2.9 — 2.9
Transfer of share-based payment reserve on vesting of
share awards — — — (1.4) 1.4 —
Share-based payment movement in investment in
subsidiaries — — — 1.1 — 1.1
At 31 December 2022 52.6 273.5 280.5 11.6 130.3 748.5
At 1 January 2023 52.6 273.5 280.5 11.6 130.3 748.5
Profit for the year — — — — 34.5 34.5
Other comprehensive income/(expense):
– actuarial movements on retirement benefit asset 22 — — — — 6.4 6.4
– tax on items taken directly to other comprehensive
income — — — — (1.5) (1.5)
– impact of change in UK tax rate — — — — (0.1) (0.1)
Other comprehensive income for the year — — — — 4.8 4.8
Total comprehensive income for the year — — — — 39.3 39.3
Dividends (note 9) — — — — (38.4) (38.4)
Issue of share capital 0.6 2.8 — — — 3.4
Share-based payment charge 31 — — — 2.5 — 2.5
Transfer of share-based payment reserve on vesting of
share awards — — — (2.6) 2.6 —
Share-based payment movement in investment in
subsidiaries — — — (0.2) — (0.2)
At 31 December 2023 53.2 276.3 280.5 11.3 133.8 755.1
Other reserves are further analysed in note 32.
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Financial statements
Statements of cash flows
For the year ended 31 December
Group | Company | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| Note | £m | £m | £m | £m | |
| Cash flows from operating activities | |||||
Cash (used in)/generated from operations | 35 | ( | ( | 248.0 | (106.6) |
Finance costs paid | ( | ( | (55.3) | (30.6) | |
Finance income received | 24.4 | 57.2 | |||
Tax paid | ( | ( | — | — | |
Net cash (used in)/generated from operating activities | ( | ( | 217.1 | (80.0) | |
| Cash flows from investing activities | |||||
Purchase of intangible assets | 20 | ( | ( | — | (2.3) |
Purchase of property, plant and equipment | 16 | ( | ( | (0.3) | — |
Proceeds from sale of available for sale investment | — | — | |||
Cash placed on deposit | — | (90.0) | |||
Acquisition of a subsidiary | ( | — | — | ||
Dividends received from subsidiaries | 33 | — | 115.3 | ||
Net cash (used in)/generated from investing activities | ( | ( | (0.3) | 23.0 | |
| Cash flows from financing activities | |||||
Proceeds from bank and other borrowings | — | — | |||
Repayment of bank and other borrowings | ( | ( | (163.5) | (30.0) | |
Payment of lease liabilities | ( | ( | (4.4) | (2.2) | |
Dividends paid to Company shareholders | ( | ( | (38.4) | (42.8) | |
Repayment of loan from subsidiaries | — | (70.0) | |||
Proceeds from derivatives | — | (0.7) | |||
Proceeds from issue of share capital | 30 | 0.1 | 0.2 | ||
Purchase of own shares for share awards | ( | — | — | ||
Net cash generated from/(used in) financing activities | ( | (206.2) | (145.5) | ||
Net increase/(decrease) in cash, cash equivalents and overdrafts | ( | 10.6 | (202.5) | ||
Cash, cash equivalents and overdrafts at beginning of year | 4.1 | 206.6 | |||
Cash, cash equivalents acquired from Snoop (note 18) | — | — | |||
Cash, cash equivalents and overdrafts at end of year | 14.7 | 4.1 | |||
| Cash, cash equivalents and overdrafts at end of year comprise: | |||||
Cash at bank and in hand | 12 | 14.7 | 4.1 | ||
Overdrafts (held in bank and other borrowings) | 28 | ( | ( | — | — |
Total cash, cash equivalents and overdrafts | 14.7 | 4.1 |
1
Cash at bank and in hand includes £681.5 m (2022: £420.5 m) in respect of the liquid assets buffer, including other liquidity
resources, held by Vanquis Bank Limited in accordance with the PRA’s liquidity regime.
1 2022 cash flows reclassified between proceeds from and repayments of bank and other borrowings within cash flows from financing activities due to
netting of retail deposit retained amounts totalling £155.5m.
Financial statements continued
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Financial statements
Statement of accounting policies continued
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Other intangible assets continued
% | Method | |
Land | Nil | — |
| Over the | ||
| Leasehold improvements | lease period | Straight line |
| Equipment (including | ||
computer hardware) | 10 to 33 1/3 | Straight line |
Motor vehicles | 25 | Reducing balance |
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Financial statements
Statement of accounting policies continued
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134
Financial statements
| Scenario for year | ||||
ended 2023 | Base | Upside | Downside | Severe |
Weighting | 60% | 15% | 20% | 5% |
2024 | 4.5% | 3.9% | 4.8% | 5.1% |
2025 | 4.7% | 3.7% | 6.1% | 7.5% |
2026 | 4.7% | 4.2% | 6.2% | 8.0% |
2027 | 4.7% | 4.3% | 5.5% | 6.6% |
2028 | 4.7% | 4.4% | 5.2% | 5.8% |
Five-year peak | 4.8% | 4.5% | 6.4% | 8.4% |
| Scenario for year | ||||
ended 2022 | Base | Upside | Downside | Severe |
Weighting | 50% | 10% | 35% | 5% |
2023 | 4.1% | 3.4% | 4.2% | 4.6% |
2024 | 4.7% | 3.6% | 5.8% | 7.4% |
2025 | 4.8% | 4.3% | 6.3% | 8.2% |
2026 | 4.8% | 4.5% | 5.5% | 6.8% |
2027 | 4.8% | 4.5% | 5.1% | 6.0% |
Five-year peak | 4.8% | 4.5% | 6.5% | 8.6% |
Statement of accounting policies continued
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Critical accounting judgements and key
sources of estimation uncertainty continued
Amounts receivable from customers (note 13)
Group: £2,171.9m (2022 restated: £1,905.4m) continued
Key sources of estimation uncertainty continued
| Change | |||
Complaint volumes | 2023 | 2022 | % |
CMC | 38,972 | 5,716 | 582% |
Direct | 30,637 | 22,860 | 34% |
Total | 69,609 | 28,576 | 144% |
| Change | |||
Complaint uphold rates | 2023 | 2022 | % |
CMC | 11% | 14% | (3%) |
Direct | 35% | 38% | (3%) |
Total | 22% | 33% | (11%) |
| Change | |||
FOS referral volumes | 2023 | 2022 | % |
CMC | 7,346 | 1,163 | 532% |
Direct | 2,628 | 1,790 | 47% |
Total | 9,974 | 2,953 | 238% |
| Change | |||
FOS uphold rates | 2023 | 2022 | % |
CMC | 6% | 37% | (31%) |
Direct | 31% | 34% | (3%) |
Total | 14% | 35% | (21%) |
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Financial statements
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Governance Financial statementsStrategic Report Shareholder information
Financial risk management continued
(b) Liquidity risk continued
| Repayable | Over 5 | |||||
| on demand | <1 year | 1–2 years | 2–5 years | years | Total | |
| 2023 – Group | £m | £m | £m | £m | £m | £m |
Retail deposits | — | 1,137.6 | 467.0 | 408.7 | — | 2,013.3 |
| Bank and other borrowings: | ||||||
– bank facilities | 1.5 | — | — | — | — | 1.5 |
– senior public bonds | — | — | — | — | — | — |
– securitisation | — | 13.6 | 207.4 | — | — | 221.0 |
– retail bonds | — | — | — | — | — | — |
– Tier 2 capital | — | 17.8 | 17.8 | 53.3 | 271.0 | 359.9 |
– TFSME | — | 1.3 | 175.3 | — | — | 176.6 |
Total borrowings | 1.5 | 1,170.3 | 867.5 | 462.0 | 271.0 | 2,772.3 |
Trade and other payables | — | 44.1 | — | — | — | 44.1 |
Lease liabilities | — | 10.7 | 10.7 | 11.3 | 11.9 | 44.6 |
Derivative financial instruments | — | 6.2 | (0.7) | (3.7) | — | 1.8 |
Total | 1.5 | 1,231.3 | 877.5 | 469.6 | 282.9 | 2,862.8 |
| Repayable | Over 5 | |||||
| on demand | <1 year | 1–2 years | 2–5 years | years | Total | |
| 2022 – Group | £m | £m | £m | £m | £m | £m |
Retail deposits | — | 602.3 | 322.5 | 214.7 | — | 1,139.5 |
| Bank and other borrowings: | ||||||
– bank facilities | 1.0 | — | — | — | — | 1.0 |
– senior public bonds | — | 107.7 | — | — | — | 107.7 |
– securitisation | — | 122.5 | 178.4 | — | — | 300.9 |
– retail bonds | — | 63.1 | — | — | — | 63.1 |
– Tier 2 capital | — | 17.8 | 17.8 | 53.3 | 288.8 | 377.7 |
– TFSME | — | 1.3 | 1.3 | 175.3 | — | 177.9 |
Total borrowings | 1.0 | 914.7 | 520.0 | 443.3 | 288.8 | 2,167.8 |
Trade and other payables | — | 62.8 | — | — | — | 62.8 |
Lease liabilities | — | 11.1 | 10.2 | 18.5 | 14.2 | 54.0 |
Derivative financial instruments | — | 9.1 | 6.1 | 1.2 | — | 16.4 |
Total | 1.0 | 997.7 | 536.3 | 463.0 | 303.0 | 2,301.0 |
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Financial statements
Financial risk management continued
(b) Liquidity risk continued
Financial liabilities continued
| Repayable | Over 5 | |||||
| on demand | <1 year | 1–2 years | 2–5 years | years | Total | |
| 2023 – Company | £m | £m | £m | £m | £m | £m |
| Bank and other borrowings: | ||||||
– bank facilities | — | — | — | — | — | — |
– senior public bonds | — | — | — | — | — | — |
– retail bonds | — | — | — | — | — | — |
– Tier 2 capital | — | 17.8 | 17.8 | 53.3 | 271.0 | 359.9 |
Total borrowings | — | 17.8 | 17.8 | 53.3 | 271.0 | 359.9 |
Trade and other payables | — | 235.4 | — | — | — | 235.4 |
Lease liabilities | — | 3.7 | 3.7 | 2.4 | 5.6 | 15.4 |
Derivative financial instruments | — | 6.2 | (0.2) | (3.0) | — | 3.0 |
Total | — | 263.1 | 21.3 | 52.7 | 276.6 | 613.7 |
| Repayable | Over 5 | |||||
| on demand | <1 year | 1–2 years | 2–5 years | years | Total | |
| 2022 – Company | £m | £m | £m | £m | £m | £m |
| Bank and other borrowings: | ||||||
– bank facilities | — | — | — | — | — | — |
– senior public bonds | — | 107.7 | — | — | — | 107.7 |
– retail bonds | — | 63.1 | — | — | — |