Newsletter: December 2016

Some thoughts…

With the festive season almost upon us, it’s time to draw breath and consider what an interesting year 2016 has been. With the loss of so many brilliant people like David Bowie and Terry Wogan (unfortunately, just the tip of a rather large iceberg this year), Brexit, and finally president-elect Trump, I for one look forward to closing the book on 2016 and hope in earnest that 2017 is a far more positive year.

The regulatory landscape has changed significantly this year. The FCA has done excellent work in getting to grips with the high-cost short-term credit market (amongst others) and I’m sure these efforts will continue. We have seen a number of commercial debt management companies decide that they can no longer meet the exacting requirements laid out by the FCA and have left the industry and I am sure more are to follow. Given that they have had to deal with 55,000 firms transitioning over from the old OFT regime since they took over regulation of the consumer credit industry in April 2014, I think the FCA have done an excellent job.

We are finding that as long as you engage early, creditors in general are far more willing to work with you in order to reach an amicable solution than they perhaps have done in years gone by – however, there does always come a point when they have had enough of debtors avoiding all contact and will throw the book at you out of sheer frustration if nothing else. The lesson here is that if you have a financial problem, speak to your creditors as soon as you become aware of it (at least get some professional advice if nothing else) to avoid problems escalating into crises.

We are constantly approached by company directors who have problems with Personal Guarantees. I have lost count of how many times I have heard “I don’t understand it – the bank manager told me at the time it was a formality and the bank never call on them”. I believe that PGs need to be looked at again by the regulator as I think company directors need far more protection here. It is very common with some trade suppliers to have a PG paragraph buried in the “application for a trade account”. Whilst the 2006 Companies Act does require company directors to “act with due diligence and skill”, this seems to have led to a culture of caveat emptor which could be open to abuse.

I shall resist the temptation to discuss the recent US election, but I do feel the need to make one comment about Brexit. The pro-leave campaign are citing the recent economic numbers as proof positive that the UK can do far better outside the EU – for those that think this way, I have some bad news ….we are still in the EU and nothing will change until Article 50 gets invoked (which may potentially not happen given the legal complexities and the “nature” of the proposed Brexit which we won’t know until the negotiations have started). I for one would be at all surprised if 2017 sees a 2^nd referendum (the EU does have some form here).

I wonder what 2017 will have in store for us all….

Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.