RABF opinion and comment: July 2014

Thursday 31 July 2014

“First they ignore you, then they laugh at you, then they fight you, then you win.” - Ghandi - RABF will get justice for those that have been abused by fraudalent factoring companies

Wednesday 30 July 2014

Insolvency Firm in Second BIS raid - P & A Partnership - Sheffield

Officers from the Department for Business Innovation and Skills have raided Sheffield insolvency specialists The P&A Partnership for a second time.

A government team backed by South Yorkshire Police, turned up at the firm's headquarters on Queen Street in the City Centre.

They staged a search lasting several hours before again seizing material.

It is the second operation involving the firm after BIS and police raid in June.

A South Yorkshire Police spokeswoman said "officers assisted BIS to excuste a warrent at two business premises...on 16th July.

P&A is one of the largest IP firms in the country

If you require a PDF the star article please email PA@rabf.org.uk

Mark Carney: Lloyds actions 'clearly unlawful' - The Governor must start looking at asset based lending

ADMIN: THERE IS NO RIGHT OF APPEAL AT LLOYDS COMMERCIAL FINANCE TO ANY DECISION MADE BY THEIR STAFF - JUDGE, JURY AND....... - IT IS SIMPLY WRONG

The governor of the Bank of England has strongly condemned Lloyds Banking Group for its attempts to manipulate two key interest rates.

Part of Lloyds' £218m fine from US and UK regulators relates to its attempts to reduce the fees it paid to the Bank of England for the Special Liquidity Scheme - a government programme to help struggling banks during the financial crisis.

Mark Carney was highly critical of Lloyds' conduct. Credit: Lefteris Pitarakis/PA Wire/Press Association Images

The Bank of England has now published a letter from governor Mark Carney to the chairman of Lloyds, Lord Blackwell.
"Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved," Mr Carney wrote.

Monday 28 July 2014

Lloyds staff will find it harder to sneer at RBS rivals - It say's it all

Tables turning for banks as Lloyds agrees £226m settlement

Lloyds Banking Group employees have always taken comfort from the fact that however bad things seemed at the UK lender, they inevitably appeared far worse at its rival Royal Bank of Scotland.

But in recent days the tables have been turning between the two banks that were bailed out by the British government during the financial crisis at a total cost to the taxpayer of more than £67bn.

Continue reading: http://www.ft.com/cms/s/0/aa9e4152-166d-11e4-a5c7-00144feabdc0.html#axzz38ptX2Ziz

Bibby Financial Services hires former Barclays director to boost funding

Gary Davis appointed as southern regional sales director at independent funder. - See more at: http://www.business-money.com/announcements/bibby-financial-services-hires-former-barclays-director-to-boost-funding#sthash.DU4ZCNof.TtQcoyqy.dpuf

Bibby Financial Services (BFS), has appointed former Barclays director of Trade and Working Capital, Gary Davis.

With almost 20 years’ experience in the invoice finance industry, Gary spent the past seven years at Barclays, where he headed-up both commercial finance and SME funding teams.

Friday 18 July 2014

Holding people accountable is ultimately the only way to bring about real change to the asset based finance industry through the criminal courts.

When the Government finally realises the enormity of the fraud (“it is better for us [abl] to get the money than HMRC”) being committed by a number of asset based lenders against HMRC and applies sizable cash penalties against these companies, it will be hard to find anyone who feels that the penalty is going to have any impact on the behaviour of some in the industry in the future.
There’s a simple reason for that: punishing the factoring company, rather than individuals, doesn’t get at the root of the problem. Shareholders (who are the ones effectively paying the fine) certainly deserve blame for tolerating—and, in some cases, arguably encouraging—factoring companies risky and dubious lending practices so they can gorge on hidden costs and termination fees
More to the point, if you really want to punish and, perhaps more important, deter bad business behaviour; you have to penalize the individuals who committed them. Instead, at least so far, the people who made the decisions to sign contracts in the knowledge that they knew were almost certain to go bad for the client. Set aside the question of criminal prosecution. They won’t even be forced to give up their bonuses or the salaries they got as a reward for putting together these corrupt deals. They will wrongly be able to keep gains that were, by any measure, ill-gotten.
Punishing individuals is especially important in the case of asset based lenders, because brokers, sales people, executives are incentivized to engage in behaviour that is incredibly lucrative for them (since their bonuses are pegged to short-term performance) but incredibly destructive to their clients. You can certainly fault asset based lenders for setting up such destructive incentive structures, and for creating a business climate in which shady behaviour is encouraged.
While banks did incredibly badly during the financial crisis, plenty of asset based lenders and their employees (including plenty of C.E.O.s) did incredibly well. And the fact that they’ve kept the money they made doesn’t exactly send the right message, while destroying perfectly solvent companies.
It’s true that since the media started exposing the industry some have tried to do a better job of making sure that the interests of clients, companies and employees are aligned. The reality is that short-term incentives are still incredibly powerful in the industry, and there are always going to be people who are putting their own interests ahead of those of the company—or, needless to say, of their customers.
Holding people accountable is ultimately the only way to bring about real change to the asset based finance industry through the criminal courts.

Wednesday 16 July 2014

Small Business, Enterprise and Employment Bill 2014/15 - A real opportunity for reform

The Small Business, Enterprise and Employment Bill 2014/15 is probably the only opportunity that we will get as a Group in this Parliament to actually get real reform to the asset based finance sector.

If you feel you have expertise that would be useful please do not be shy coming forward - contact SME.Bill.Working.Group@rabf.org.uk

Stages of the Bill

http://services.parliament.uk/bills/2014-15/smallbusinessenterpriseandemployment.html

Small Business, Enterprise and Employment Bill 2014/15

http://www.publications.parliament.uk/pa/bills/cbill/2014-2015/0011/15011.pdf

Building a Responsible Payment Culture: Government Response May 2014

Alternative Financing Options

95. It would be a significant benefit for many small businesses to understand and have more confidence in using the full range of options now available for managing cashflow as a normal part of doing business. Some of the most common finance options available to small businesses to manage cashflow beyond loans and overdraft facilities are:
 Factoring and invoice discounting – where a business effectively gets a cash advance against payments due by selling or borrowing against all or part of its debtor book;
 Asset Based lending – where funding is secured against an asset of the business such as property, machinery or stock; and
 Supplier finance (also called supply chain finance or reverse factoring). This is where a customer puts facilities in place that mean that suppliers can claim payment immediately from a third party finance provider. The supplier gets the whole value of the invoice less a discount that is based on the customer’s credit rating. The customer then settles with the finance provider when the payment is due.
96. In the discussion paper, we asked what can be done to increase awareness of these financing options, and lower the costs to small businesses of accessing them. We also asked whether small businesses are experiencing difficulty in accessing some of these alternative financing options as a result of contractual terms imposed on suppliers by more powerful customers.

Questions Asked

97. The discussion paper asked respondents the following questions regarding alternative financing options:
 Question 22: Do small businesses have adequate access to the information and support they need to understand the external financing options available to them? What would help raise awareness of these options?
 Question 23: How could working capital options be made cheaper and more accessible to small businesses?
 Question 24: Would removing contractual barriers to selling invoices (e.g. as a result of a ban on assignment) be helpful to small businesses by increasing their access to services such as factoring and invoice finance?

Views Received

98. In general, it was felt that small businesses do not currently have a full understanding of the financing options that are available to them and that a negative perception of such options prevails amongst many smaller businesses. It was noted that even when they are aware of the possibility of options such as factoring and asset financing, small businesses do not always know where to access impartial advice on how to utilise these options. A number of respondents suggested that a single source of information on financing options for small businesses would be helpful.

Building a Responsible Payment Culture: Government Response

99. A number of respondents suggested that the best way to make alternative financing options cheaper and more accessible to small businesses is to focus on addressing late payment of invoices. It was noted that an improved cashflow would lead to a stronger credit rating for suppliers, which could allow them to access credit and financing on cheaper terms. Some respondents also suggested that Government (or the British Business Bank) could provide targeted funding solutions to reduce the costs of such financing options to small businesses.
100. A small number of respondents suggested that reducing the costs of such financing options may not be possible or advisable. They suggested improving education available to small businesses to enable them to understand which working capital financing options might be most economical for them.
101. A majority of respondents to the last question agreed that removing contractual barriers to selling invoices would help increase access to financing options such as factoring and invoice finance. Nevertheless, some respondents noted that further barriers, such as aversion to external financing amongst many small businesses and the costs of such options, may continue to discourage small businesses from accessing these financing options.

Government Response

102. We appreciate that, for some businesses, invoice and working capital financing may not be appropriate. Nevertheless, we believe that more can be done to increase the availability of such options to those who would benefit from them. In particular, we agree with respondents that action should be taken to remove unhelpful contractual barriers to the provision of finance. We therefore intend to introduce legislation to tackle contractual barriers such as bans on assignment when Parliamentary time permits.
103. We recognise that a better awareness and understanding of finance options would help smaller businesses to access appropriate finance solutions for their needs more effectively. This is why one of the objectives of the British Business Bank is to promote better information for smaller businesses on the finance options available to them in the business finance market, including by working in partnership with finance providers and advisors to smaller businesses.
104. Another of the British Business Bank’s key objectives is to help create a more diverse market for finance for small businesses with greater choice of financing options and providers. This is best reflected in its combined Investment Programme, which has a current portfolio of 10 commitments to 9 finance providers totalling £172m that support lending capacity of over £800m through a range of alternative

“Awareness and understanding amongst growing businesses of these finance options is low. In particular, invoice factoring can carry negative connotations, with businesses fearing they will seem to be unable to mange their finances”. Confederation of British Industry response

“Such barriers are an unnecessary restriction and are an articulation of the disparity of power in a commercial relationship. It is notable that they are usually found in standard form contracts drafted unilaterally by large customers”. Asset Based Finance Association response

Building a Responsible Payment Culture: Government Response

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finance providers such as direct lending funds, peer to peer (P2P) lenders and supply chain finance providers. To date, over £280m of lending to smaller businesses has been supported as a result of these commitments, which also help to accelerate the development of the respective alternative provider models. Further commitments under the current Investment Programme will build on this lending capacity and support more diversity in the market.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315462/bis-14-793-building-a-responsible-payment-culture-government-response.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315462/bis-14-793-building-a-responsible-payment-culture-government-response.pdf - See more at: http://www.abfa.org.uk/news/2014/June/pressrelease050614.asp#sthash.ZDp597rL.dpufGovernment response to the Consultation on Building a Responsible Payment Culture - See more at: http://www.abfa.org.uk/news/2014/June/pressrelease050614.asp#sthash.ZDp597rL.dpuf

Consultation on Building a Responsible Payment Culture
The full Government response to the Consultation on Building a Responsible Payment Culture is available here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/315462/bis-14-793-building-a-responsible-payment-culture-government-response.pdf
- See more at: http://www.abfa.org.uk/news/2014/June/pressrelease050614.asp#sthash.ZDp597rL.dpuf

Monday 14 July 2014

Newsletter 101

Hello

Welcome to the RABF newsletter.

The year has gone well for the campaign for robust regulation of asset based finance industry.

The highlight so far was the Treasury Select committee where the Chairman of ABFA was made to feel very uncomfortable – rightly so. How can you defend the indefinable? If you wish to view the hearing I would suggest you start viewing after 11:00, it gets very interesting after 11:30. I was very impressed with the knowledge of the Members of Select committee. http://www.parliamentlive.tv/Main/Player.aspx?meetingId=15491

As a group we are meeting a senior advisor to the Minister in charge of regulation of asset based finance on Thursday – which is key to our ability to achieve regulation.

We need case studies urgently to give to the Minister and to the Treasury Select committee – please can you contact me.

If you need an ear to listen to or point you in the direction of help just either ring or email. Remember all though it was not one of the objectives of this virtual group – it has become an important part of what we do. This is always someone else who has been damaged by these people who’s learnt.

Even with the new code of conduct and ombudsman service from ABFA the behaviour of the bottom feeders continues unabated.

If you feel that there may be people who would like a copy of the newsletter please do not hesitate to either pass on the newsletter or get them to contact RABF.

I will make this a monthly newsletter, being produced the end of every month.

Any feedback on what you would like to see in this moving forward would really be appreciated.

On a personnel note funding the campaign is tough on my wage – but this is a labour of love and every time we help someone or move to the next step it is a marvellous feeling.

I would also like to thank the small group who support me on a weekly basis – over the last few years there are so many people who have helped.

If you do not want to receive the newsletter please do not hesitate to email me back and I will take you off the mailing list.

Best wishes

Brian Moore

For and behalf of

The Campaign for the Regulation of the Asset Based Finance Industry

07825050704

www.rabf.org.uk

Friday 11 July 2014

meeting with senior Government officials

Representatives of RABF including a major IP firm, broker, forensic accountant and 'victim' met with senior government officials yesterday.

The meeting was an open discussion between both sides which RABF has been asked to provide further substantive information.

ABFA's code of conduct while it was commented it the greatest jump from the industry in the last 10 years (against strong internal opposition - never to be quoted out of context). It was also observed that we were sure that the same banks wished they could have had a £25K non back dated Ombudsman scheme with PPI, Swaps miss-selling and Libor!

It was also commented upon that asset based lending operating within a safe robust regulatory framework would expand rapidly.

The question was asked had the new code of conduct altered behaviour within factoring industry? It was felt that fear of being named and shamed in the national media was a stronger limiter of excessive behaviour.

Lucy Armstrong was complemented on her committment to bring reform to the industry.

Saturday 5 July 2014

Insolvency Firm is raided by BIS team - Self Regulation has been failing.....