Alphabet Credit Management SME Team REQUIREMENTS & GUIDANCE

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1 Alphabet Credit Management SME Team REQUIREMENTS & GUIDANCE Contents Page Summary of Application Journey 1 Icon Applications 1 Credit SLAs 2 Communication with Credit Management 3 Supporting/Additional Information (AIR) 3 Decline Appeals 3 Acceptance Swaps 4 Foreign Companies 4 New Start Businesses 4 Sole Traders/Partnerships (Affordability & Eligibility) 5 Consumer Guidance 5 Summary of Application Journey As part of the customer journey, Alphabet undertakes a variety of checks against each application. These checks consist of: credit worthiness, fraud, and sanction list checks. Applications must meet all criteria to obtain a favourable lending decision. Alphabet operates three scorecards; namely, Consumer, Commercial and Blended (Co-Co). The initial automated scorecard decision will result in one of the following outcomes: 1) Auto-accept (with or without Directors indemnity) 2) Auto-decline 3) Refer Consumer scorecard - provides an automated decision for private individual applications. Note: all private individual applications are eligible to auto-accept, auto-decline or refer. Commercial scorecard - provides an automated decision on all business applications. Blended (Co-Co) scorecard - provides an automated decision where a guarantee is offered on a Commercial application Key Points All referred applications are manually decisioned by Alphabet s Credit Management team. The Credit Management team have no visibility on applications which auto-accept/decline or corresponding Icon notes, unless advised to review the application. Alphabet use Equifax as the primary credit reference agency. Icon Applications Each Icon proposal (i.e. number) relates to an individual vehicle & potential contract. Therefore, if multiple vehicles are required, separate credit applications should be generated in Icon for each vehicle to be funded.

2 Credit SLAs Timescales on SLAs are driven by the total credit limit required and the associated level of BMW Group sanction. Credit limits are calculated based on the customer s total group exposure, across all Alphabet markets. Typically, all credit requests can be processed within the UK credit team s approved limits (c. 30m). However, a lesser credit limit in the UK may still require sanction by Alphabet s Central Credit Committee in Munich, due to high limits internationally. Alphabet will consider supporting a formal funding limit for a 12 month period, when the funding opportunity exceeds 250k. All formal funding requests should be directed to your Regional Development Manager, who will complete & submit a formal funding application to SMECreditManagement@alphabet.co.uk The current credit service level agreements are outlined below: Within Local Sanction Total Credit Limit (based on total customer exposure and includes all group counterparties - UK or otherwise) Informal limits (i.e. Icon Proposals up to 250k) Formal limit: > 250k Formal limit: > 500k Formal limit: > 5m to maximum local approval authority Decline Appeals Acceptance Swaps SLA Deadline 6 working hrs* 4 working days 6 working days 8 working days Close of business the following day (once received by Credit Management) 24 hrs Above Local Sanction Over local approval authority Excluded Categories (sub-lessors, taxi companies, driving schools, sole trader/small courier companies, security companies, car rental companies) Credit management require 10 working days to prepare and submit the application to Munich. Overall sanction may then take an additional 4 weeks; depending upon dates of the next Regional Risk Committee meeting in Munich. To be agreed on an individual basis, that will depend on the limit required and nature of risk. *Working hours are defined as 9am 5pm Monday to Friday All credit applications requiring a formal credit review (i.e. > 250k) will be initially responded to with confirmation of the corresponding SLA and details of any information required to enable Credit Management to complete a credit review. Please note, the SLA will begin from the point when ALL the requested information is received by Alphabet, to enable us to complete the credit review. Credit SLAs restart on each occasion a credit application or additional information is submitted to Alphabet. N.B. please don t chase credit applications if your proposal is still within the above SLA timeframes.

3 Communication with Credit Management Credit management do not operate a direct dial-in capability. All phone queries for Credit Management should be directed via the Support team. s to Credit Management should be sent directly to SMECreditManagement@alphabet.co.uk, and only in relation to swaps, decline appeals (see guidance below) and general underwriting queries. Please do not any information directly to a credit analyst s personal this will not be processed within SLA. s should be clearly signposted with the subject header including: Icon No, Customer Name & proposal status (e.g , Smiths Ltd & Add info). Credit Management do not contact customers or their financial advisers. Please do not pass on Credit Management s contact details to customers. Supporting/Additional Information (AIR) The submission of supporting/additional information to credit management utilises Icon functionality to streamline the credit application journey. The process is as follows: 1) Upload all information directly into Icon 2) Add any notes to the application 3) Resubmit the proposal in Icon No additional information will be processed if submitted via . The credit SLA will commence from the point the above steps are fulfilled. Please provide ALL information requested by Credit Management, incomplete or missing information may result in further additional information requests and delays in processing the application. Alphabet policy requires financial information to be dated within 18 months of the credit application. (e.g. accounts dated year-end December 2016, will only be considered eligible until June 2018). Alphabet do not consider business plans, forecast figures or bank statements for any type of business credit application. Please Note that Credit Management will not be made aware of any notes or additional information added to an accepted or declined application. Decline Appeals Appeals on any decline decision should be submitted via your regional development manager, with additional new supporting information to the original decision. The only exception to this process is for newly incorporated businesses that have yet to file accounts at Companies House. These can be appealed directly to Credit Management via with supporting information as detailed below under New Start Businesses. For commercial (business) appeals, full financial accounts and directors guarantee should be obtained and made available via Icon. For consumer (private individual) appeals, a copy of the applicants Equifax report should be obtained in the first instance to ascertain whether there is basis for an appeal. If so, this should be submitted alongside their last 3 months bank statements. Please note that further information in addition to the above may be requested, if required, to be able to consider an appeal.

4 Acceptance Swaps Alphabet will consider acceptance swaps based on the below criteria: 1) Swap request relates to the same business/individual 2) The initial credit acceptance was obtained within 90 days otherwise, the proposal will be viewed as a new application and will be re-underwritten 3) The initial conditions of approval will apply to the new (swapped) application 4) The Retailer must be the same on both applications unless, a letter is provided to Alphabet from the customer advising the intention to switch providers. The onus is on the customer to advise the initial provider. All swap requests should have a note added to the new application prior to submission and additionally requested by to SMECreditManagement@alphabet.co.uk, Swap s should clearly identify the application as an acceptance swap and provide both the initial and replacement Icon quote number. (e.g. - title: Acceptance Swap from to ). Foreign Companies Alphabet will consider funding opportunities with foreign companies under the following conditions: 1) Foreign companies must be registered with Companies House in the UK and therefore have obtained a CRO number (typically starting with FC or BR). 2) These businesses are not obliged to file accounts in the UK, so accounting information may not be available and will need to be obtained directly from the customer. Full versions of accounts for the business and parent company must be obtained in English format (Alphabet do not translate accounts). 3) Alphabet must be able to clearly identify the ultimate beneficial owners. 4) Only listed directors or individuals listed in a letter of delegated authority can sign our documents (Alphabet will provide the necessary format when required) 5) The business will need a UK bank account so Alphabet can collect the direct debit. New Start Businesses Applications for newly incorporated businesses (i.e. companies which haven t yet filed their first year s accounts with Companies House) could refer or decline depending on the directors trading history. Alphabet may consider contracting with a new start-up business, though, we require ALL the following information: 1. Up-to-date draft or management accounts (inc. P&L and balance sheet) or at least an opening balance sheet together with proof of trading (business bank statement/invoice) 2. Confirmation of business activities (trading activities, history, & website if they have one) 3. Director s guarantee always required on application when the business was incorporated within the last 3 years 4. Directors trading history (i.e. previously sole trader for xx years) 5. If the business previously traded as a sole trader or partnership, we would expect to receive the sole trader tax returns (ideally prior 3 years) or partnership accounts, for period end prior to the incorporation date. Please note that for Alphabet to consider an application from a business, they must have commenced trading.

5 Sole Traders/Partnerships (Affordability & Eligibility) We have introduced an enhancement to our scorecard which will give us the ability to provide an automated credit decision for the above entities. Although the scorecard will cover affordability, Alphabet still has a responsibility to establish the eligibility of the customer. As a result, if you receive an automated acceptance you will need to send us documentation demonstrating the customers trading status, prior to being able to organise finance agreements. For Sole Traders please provide either the customer s full tax returns (SA103) in the proposed clients name or full accounts showing the clients name and trading style For Partnerships please provide either the customer s full partnership tax returns (SA800) in the proposed clients name, or full accounts showing the named partners and trading style Please upload these into the Eligibility card in ICON so that our Credit Management team can review. Proposals that still REFER: If you get this decision, the scorecard has not been able to establish affordability. To proceed you must upload to us (using the additional information box); For Sole Traders either the customer s full tax returns (SA103) in the proposed clients name, or full accounts including P&L and Balance Sheet, dated within the last 18 months showing the clients name and trading style For Partnerships either the customer s full partnership tax returns (SA800) in the proposed clients name, or full accounts including P&L and Balance Sheet, dated within the last 18 months showing the named partners and trading style Our Credit team will use this information to review the proposal. PLEASE NOTE: If the case is accepted manually, the eligibility card will not appear when you require documents, as eligibility has been satisfied. Consumer Guidance The consumer scorecard looks at the applicant s credit data held by Equifax with the provided details, so it is important that the details on the application are correct. Additional supporting information that may be requested/provided is as follows (though this is not an exhaustive list); Bank Statements. Full bank statements for the last consecutive 3 months (incl. most recent month) and any savings accounts. Bank statements must include the applicants name, date, confirm any overdraft limit and reflect applicant s main income. PDF format only. Summary sheets and photo versions are not acceptable Proof of employment. Copy of the applicant s employment contract, this must include details of their job role, salary, commencement date and any car allowance. Contract must be dated and signed. Payslips. Copy of applicant s payslips for last consecutive 3 months (incl. most recent month). Finance settlement. If the customer has outstanding motor finance, we would want confirmation of whether this application replaces the current commitment or is additional. If a replacement we would want settlement details (incl. settlement figure, monthly payment and name of existing lender) Proofs of applicant data. If we are unable to trace the customer we may ask for proofs of address (x2 proofs dated within the last 3 months), ID proofs, and/or additional address history. Key points An incorrect address, DOB or variation in the applicant s name could cause the search to return no or minimal information and lead to a decline. We require a minimum of 3 years address and employment history to be provided on the application.