Editor: John Arnold. E-mail jarnold@creditman.co.uk
Site: Business Credit Management UK
URL: http://www.creditman.co.uk
Issue: Vol 5 Issue 24
Dated: 17 June 2001
Welcome to the Business Credit News UK.
In this weeks edition you will find the following topics.
UKNEW DEADLINE FOR MONOPOLY REPORT ON BANKING SERVICES
The Secretary of State and the Chancellor have agreed a request by the Competition Commission for a four month extension to complete their report on the supply of banking services by clearing banks to small and medium sized businesses. This will enable the Commission to consider further arguments and evidence from the banks.
The period for reporting on the monopoly reference has been extended from 19 June to 19 October 2001.
The Competition Commission were asked by the Secretary of State and the Chancellor of the Exchequer on 20 March 2000 under section 51 of the Fair Trading Act 1973 to undertake a study of the market for the supply of banking services by clearing banks to small and medium sized businesses in the UK to identify any monopoly situation and to form a view as to whether any practices which exploit or maintain a monopoly, or are attributable to such a monopoly, operate against the public interest.
Section 55(1) of the Fair Trading Act provides that a monopoly reference shall specify a period within which the Competition Commission is to report.
Section 55(2) of the Fair Trading Act provides that Ministers making the reference may give a direction allowing the Competition Commission an extended period for reporting.
DTI MUST PREVENT DATA RETENTION BURDEN - CBI
The Confederation of British Industry last Thursday told the government to block plans in Brussels on Data Retention that could significantly hit confidence in the UK E-commerce industry.
New DTI Secretary Patricia Hewitt MP was urged to veto plans to make internet service providers keep records of customer net activity for up to seven years. This proposed amendment to the Telecoms Data Protection directive is being discussed by senior officials in Brussels.
If passed, law enforcement agencies could demand blanket traffic data retention. This would be burdensome for business and undermine the UK as an e-commerce location, the CBI says.
Commenting, John Stewart, chair of the CBI's E-business council said: "We believe that any blanket data retention proposals would severely undermine trust and confidence in e-business and thus do lasting damage to business competitiveness.
"We call on the Government to take all action to prevent unwanted traffic data retention requirements on service providers. So we strongly urge the DTI to ensure the UK vetoes any weakening of Data Protection laws when this is discussed at the Council of Ministers this month. We will also be lobbying the Home Office in a similar vein".
Concern from CBI members emerged at this week's E-business Council meeting, which also welcomed the Government's determination to take Broadband forward in the UK.
The European Union is currently reviewing directive 97/66/EC which deals with data protection in the telecommunications sector. There have been calls from the law enforcement community to amend Article 6, which currently prohibits data retention, allowing member States to demand data retention by service providers. The directive is being discussed by the Committee of Permanent Representatives in Brussels (COREPER) on Thursday 15 June and by the EU Telecoms Council on June 27.
KEEPING BRITAIN COMPETITIVE
Labour's second term tax challenge
After the euphoria of the General Election, the Chancellor is facing a number of very real challenges to his handling of the economy. The US economic slowdown and questions over whether the UK will decide to join the euro zone will put the spotlight onto the UK as a major destination for inward investment. This is an issue that has many facets, but one area that needs attention is the UK tax system. Leading tax advisors Ernst & Young on the June 14 published a policy paper focusing on this key aspect of the inward investment challenge – "Keeping Britain competitive – Labour's second term tax challenge".
Heather Self, one of the authors and International Tax partner at Ernst & Young, says:
"The UK attracts a significant share of the inward investment into Europe. For continued prosperity it is vital for this country to take steps to defend this enviable position. The UK tax system can act as both a barrier to and an enabler of international competitiveness. It is as complex as any in the developed world, with specific features that have a major impact – positive and negative – on those who invest here. It isn't just the rate of tax, it's the entire tax climate – the compliance burden, the flexibility of the authorities, the overlap with general business regulation – that matters."
Ernst & Young has looked at four major types of inward investment:
Heather adds:
"Following this analysis, we have put together a series of tax policy choices for the Chancellor – ranging from cautious to radical. However, the overarching message to Government is to cut the tax costs of operating in Britain and, above all, to make the tax system and its administration simple clear and certain.
"We need a genuine debate about taxation - how far it can be used to affect investor behaviour, how flexible it should be at the margins, and how best major changes can be managed. It should start now."
INFLATION IN EUROPE
Inflation in Europe gives cause for concern. British and French inflation, both at 1.8% in April, increased to 2.1% and 2.3% respectively in May. Spain's inflation hit 4.2% from 4.0%. Luxembourg, Greece and Norway all recorded faster price rises as well.
Source - The Economist
WORKERS RIGHTS IN EUROPE AND THE POUND
Britain's European partners imposed on it a European directive on Worker's Rights that requires companies to consult staff about job cuts and other restructuring. Employers moaned. The pound fell against the euro as entry to the single currency looked increasingly likely, but not at the pound's current high rate.
Source - The Economist
The OFT is consulting on guidelines to ensure that debt management companies deal fairly with customers.
Draft guidelines [1] on what the OFT regards as good practice for those who provide debt management services have been sent to the credit industry, consumer groups, debt management companies and others. The guidance also highlights disreputable activities that could lead to debt management companies losing their consumer credit licence, which would prevent them from taking on new clients.
The guidelines have been drawn up following complaints from customers, and business and consumer groups, about the practices of some firms that offer to manage and/or renegotiate personal debts.
The draft guidelines state that debt managers should:
John Vickers, Director General of Fair Trading, said:
'People with debt problems are vulnerable and we must ensure that they are treated fairly. Companies offering debt management services must make crystal clear to their customers how much they will have to pay and what they will get for their money.
'Our aim in issuing these guidelines is to make clear what we regard as unacceptable conduct. This will help ensure speedier action against those who fall below the standard required.'
The consultation period will run until 9 July, after which final guidelines will be issued. They will complement guidance on standards of behaviour expected of all consumer credit licence holders issued earlier this year by the OFT. Further sector-specific guidelines will be issued later this year for areas that attract high levels of complaint, such as debt collecting, credit broking, used cars and home improvements.
The OFT has gathered a considerable amount of evidence from customers and in addition to the guidelines will take action in respect of licences wherever the evidence shows it necessary.
Businesses that need a licence are debt adjusters and debt counsellors, consumer credit and hire businesses, credit brokers, debt collectors and credit reference agencies. Some organisations have group licences that cover all of their members.
Under Section 25(2)(d) of the Consumer Credit Act 1974 the Director General can, when determining whether or not a licensee is fit to hold a licence to carry on the business covered by a licence, consider evidence of the licensee engaging in business practices appearing to him to be deceitful or oppressive or otherwise unfair or improper (whether unlawful or not).
Decisions to revoke a consumer credit licence are made by an Adjudicating Officer for and on behalf of the Director General of Fair Trading. Before a licence is revoked the Adjudicating Officer issues a minded to revoke notice to the licensee. The licensee is then given the opportunity to make representations before a final determination is made. In the event that the determination is adverse, the licensee has the right to appeal against the determination to the Secretary of State for Trade and Industry.
Once a licensee has their credit licence revoked they are not able to offer credit facilities. Agreements already made are usually not affected.
Tony's new cabinet line-up, lead by the new Secretary of State for Trade and Industry, Patricia Hewitt, should push through the long awaited and much delayed insolvency law reforms if they are serious about preventing companies and individuals from falling off the wall, advises PKF.
The review of company rescue has been extended and delayed while the review of bankruptcy procedures seems to have disappeared altogether.
John Alexander, PKF National Director of Corporate Recovery and Insolvency, commented:
"Pushing through the long awaited company rescue reform will help avoid the Humpty Dumpty effect and enable financiers and government organisations like the Inland Revenue and Customs and Excise help put broken businesses back together again." "The new government must stop treading on eggshells and act now to remove the disabilities of bankruptcy that cripple many genuine entrepreneurs. Under present legislation bankrupt individuals are subject to a number of restrictions which prevent them from earning a living for three years. These include becoming or remaining a company director or manager or an MP or even a black cab driver. The new proposals would cut this to 12 months, while dishonest and negligent bankrupts could have these restrictions increased to 15 years. Even a 12-month period, during which a bankrupt is unable to run a business, may prove fatal to an entrepreneur's recovery process."
"You have got to break a few eggs to make a good omelette, but don't discard the omelette just because a few pieces of shell may have fallen in!"
PKF is the eighth largest firm of accountants and business advisors in the UK with more than 1,600 partners and staff operating in over 25 offices around the country. Principal services include: assurance and advisory; consultancy; corporate finance; corporate recovery and insolvency; forensic; and taxation. The firm has particular expertise in sectors such as charities; technology and e-commerce; hotel consultancy services; medical; professional partnerships; and public sector. PKF's web site address is www.pkf.co.uk
PKF's corporate recovery and insolvency experts cover all aspects of business rescue including: financial restructuring; profit improvement; turnarounds and workouts; together with formal corporate and personal insolvency procedures. They have proven national and international ability in a diverse range of industry sectors with the capacity to handle assignments ranging from multinational reconstructions to personal bankruptcy and individual voluntary arrangements.
PKF also offers financial services through its PIA regulated company, PKF Financial Planning Limited.
PKF is a member of PKF International, which has more than 8,000 people operating in over 100 countries around the world.
For further information:
John Alexander Director of Corporate Recovery and Insolvency
Telephone: 020 7831 7393
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For more detailed information and ALL the British Isles insolvency's (liquidation's, receiverships, administrations, dividends, creditors) please visit http://www.insolvency.co.uk
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Months after abandoning a merger because of regulatory difficulties, British Airways and KLM Royal Dutch started talks aimed at "alternative forms of co-operation". BA and its partner, American Airlines, also met America's transport secretary to ask for antitrust immunity to allow a deepening of their alliance.
Lufthansa, Germany's flag-carrying airline, cut its forecast for operating profit in 2001 by about a third to as little as EURO700m ($596m), blaming a EURO125m pay deal with pilots and the cost of several strikes on top of a faltering world economy. Pilots at other airlines have observed the wage rise with interest.
General Electric offered the European Commission more concessions to secure approval of its planned $40 billion merger with Honeywell. GE said it would sell bits of Honeywell's aerospace business as well as its regional jet-engine and marine-engine divisions. Negotiations with the commission continued in a fraught atmosphere as the deadline loomed.
The European Commission began investigating whether Electricite De France, an acquisitive French power company, had received any illegal state aid. Italy and Spain responded to EDF's predatory moves on domestic power companies with emergency laws meant to fend off the French firm.
Philip Morris sold 16% of Kraft, an American food giant, in an initial public offering valuing the company at $53.8 billion. America's second-largest IPO will raise around $8.7 billion, which Philip Morris will use to pay off debt.
Source - The Economist
MERGER NEWS
The Secretary of State for Trade and Industry has decided, on the information at present before him, and in accordance with the recommendation of the Director General of Fair Trading, not to refer the following merger/s to the Monopolies and Mergers Commission under the provisions of the Fair Trading Act 1973:There is no merger news this week.
A competition inquiry into the British Horseracing Board's supply of pre-race data to internet betting sites has been launched by the OFT.
Formal notices requiring information will be sent shortly to the Board (BHB), its agent, bookmakers with internet betting sites and other users of pre-race data such as newspapers.
The Competition Act inquiry follows a complaint from William Hill that BHB is abusing a dominant position as the sole provider of race and runner data on UK horseracing. The bookmaker alleges that this has enabled BHB to set excessive and discriminatory pricing and restrictive licensing terms.
The OFT said that after preliminary enquiries into the complaint it had reasonable grounds for suspecting that BHB had infringed Chapter ll of the Competition Act 1998, which prohibits abuse of a dominant position. No assumption should be made at this stage that there has been an infringement.
The Act empowers the Director General of Fair Trading, John Vickers, to set financial penalties for infringements, as well as remedies.
The BHB is the governing authority for horse racing in Great Britain. The members of the BHB comprise the Jockey Club, the Racecourse Association, the Racehorse Owners Association and the Industry Committee (Horseracing) Ltd. BHB is a company limited by guarantee, which was formed in 1993 to take over some administrative functions previously undertaken by the Jockey Club. The BHB has no statutory role although it was set up following a Home Affairs Committee report.
BHB has, through its agent, Weatherbys, compiled a database of information relating to horse racing, which includes: race venues; dates; times; race conditions; entries; runners; pedigrees; registers of owners, silks, trainers and horses, and jockeys; and handicap data. This broad database allows the BHB to fulfill its regulatory and administrative functions.
22 June The Institute of Credit Management Fellows' Luncheon Dartmouth House Mayfair, London Tickets £42.00 plus vat To reserve places telephone 01780-722907 E-mail training@icm.org.uk 25 June Institute of Credit Management - Wessex Branch meeting How Credit Managers can get the most out of E-Commerce Presentation by Bill Chalker of the National Westminster Bank Plc Royal Southampton Yacht Club Channel View Road, Southampton. 7pm for 7.30pm start Refreshments provided. Friday 29 June Institute of Credit Management - Sussex & Surrey Branch Summer Social - Wine Tasting Bookers Vineyard Foxhole Lane, Bolney, West Sussex Time: 7.00 for 7.30 p.m. Wednesday, Thursday and Friday 24th to 26th October 2001 International Credit Exhibition & Conference The Westin Stamford, Singapore http://www.internationalcredit001.com Mailto:info@internationalcredit001.com If you have an event coming up which is credit management related and you would like us to make an entry in the Diary section please e-mail the details to jarnold@creditman.co.uk
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