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Recently a small group of business directors that were pushing for regulation of their lenders that provided funding based on their company order books has said that it is likely to be more difficult than they first thought.
The founder of the Campaign for the Regulation of Asset Based Finance Brian Moor met with civil servants from the Department for Business and the Insolvency Service of the Treasury this week. Their aim was to push the case for some form of legislation for what now is one of the very few unregulated parts left in the financial services industry across the United Kingdom.
Brian Moor has claimed that there shall be an agreement that regulation would build much needed trust in the lenders. But he has recently also admitted to the Financial Times earlier in the week that things will not happen overnight and getting any sort of change in the law will take time.
Not everyone is in the same boat as Brian Moor though, the Financial Times spoke to Jonathon Gregory. He has helped many different businesses when they had been in difficulties and helped them to find factoring providers. This is what he had to say…
“There would be a few problems with regulation asset based finance as there is a huge amount of innovation that turns it all into an industry of small factoring companies. If costs come into place the smaller factoring companies will all fall into the hands of banks, the only companies that can afford to comply with the regulations!”
Gregory does agree with voluntary code that has also been proposed by the Asset Backed Finance Association (ABFA), the nation’s industry trade body. But he did make the point that it needs to be structured in a way where there was things put in place to make sure it was properly enforced across the industry.
There has been a massive rise in asset based finance since the banking crisis. This is because it’s an easier and more flexible way of sourcing working capital for the smaller business owners, rather than going to the bank for overdrafts and fixed term loans.
On the other hand there has been a huge amount of criticism around the lack of control on the fees for these changes. This is because some business owners have recently claimed to have forced their own businesses into administration in unnecessary circumstances.
"Target Business Assist have provided our business with a new invoice factoring system that has dramatically improved our cash-flow position and flexibility with our clients..."
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