1st July 2013
ABFA launches self-regulatory framework and appoints chairperson of new Professional Standards Council
The Asset Based Finance Association (“ABFA”), the trade body for the invoice finance and asset based lending industry in the UK and Republic of Ireland, launches its self-regulatory framework. As part of this framework, the ABFA has appointed Lucy Armstrong as the chairperson of the newly established Professional Standards Council (“PSC”).
Lucy Armstrong, Chairperson of the Professional Standards Council said: “This new framework is about putting the interests of ABFA client businesses first. Invoice finance and asset based lending are hugely important sources of finance for UK and Irish businesses. The new framework is part of an industry initiative to support more businesses in the future, providing a real alternative to traditional sources of finance. In a financial services environment under significant scrutiny, a new self-regulatory framework for the asset based finance industry is an important and responsible step forward. I look forward to playing my role in the evolution of the industry.”
This new self-regulatory framework is in force for ABFA Members from 1st July 2013. It incorporates a revised ABFA Code, based on six key principles around treating customers fairly and responsibly. The Code and supporting Guidance set clear expectations for Members’ treatment of their clients.
At the heart of the new framework is an independent Complaints Process managed by the specialist dispute resolution organisation, Ombudsman Services. This Complaints Process has been designed with a particular focus on supporting smaller businesses (those with a turnover of up to £6.5m per annum). The framework ensures that these businesses will have an independent process to access if they believe they have been not been treated fairly.
Within the framework, the ABFA has also established a Professional Standards Council. This body oversees the ABFA Code and the independent Complaints Process and is charged with ensuring that they are up to date and effective. In addition to overseeing the Code and issues emerging from the Complaints Process, where necessary the PSC is able to take a range of actions to maintain and enhance the reputation of the industry. These include sanctions against Members.
The PSC is independent of the ABFA and its membership comprises a majority of lay members. Lucy Armstrong, Chief Executive of The Alchemists, has been appointed as independent chairperson.
The Alchemists work with high growth mid-sized corporates to accelerate their development and success by focusing on shareholder and management development and succession. Lucy is also chair of Capital for Enterprise, responsible for over £4bn of government backed debt and equity support to UK private and family businesses and an angel investment network, along with being a non-executive director of a national qualification business. She was chair of the CBI’s national Small Business Forum from 2010 to 2013 and has recently joined the advisory board of the Government’s new Business Bank.
Rt Hon Michael Fallon MP, Business Minister commented on the launch: “Asset based finance is a useful option for small businesses seeking finance. It is therefore important small firms are confident that lenders will behave responsibly and fairly. By establishing a standards council and an independent complaints process, the sector is showing its ambition to make the step up and play a much greater role in the economy.”
Dr Adam Marshall, Director of Policy and External Affairs, British Chambers of Commerce said: “Invoice finance is now an established part of the business finance landscape for SMEs. So it is encouraging to see the industry taking the lead in clearly demonstrating the standards it will meet and putting in place an independent complaints mechanism for businesses to turn to if they think they have been treated unfairly. This framework should allow more businesses to use invoice finance with confidence and we welcome it.”
Kate Sharp, CEO of the ABFA said: “The launch of the new framework is an extremely important development for the ABFA. It is about demonstrating the standards the industry works to and providing an independent process for clients to use if they have concerns about standards. We want to ensure that the industry’s current and future clients can have the utmost confidence in our Members and asset based finance as a tool for growth.”
Lewis Shand Smith, Ombudsman Services said: “Ombudsman Services has been pleased to develop the independent Complaints Process for the Asset Based Finance Association. We look forward to working with the Association and its Members to ensure the best outcomes for their clients.”
Other commentary on the launch:
Sir David Arculus, Chairman, Aldermore said: “As an organisation whose principles are to be transparent and open, Aldermore welcomes and fully endorses the ABFA Code. Customers should always receive exceptional service and we truly believe that the ABFA Code will ensure consistency across entire invoice finance industry.”
The asset based finance industry, which includes the asset based financing arms of the major UK and Irish banks, challenger banks, as well as independent specialist finance companies, has over 50 years’ experience of providing funding to businesses of all sizes from SMEs to large corporates. At the end of Q1 2013 ABFA members were providing over £16 billion (€19 billion) of funding to around 43,000 businesses in the UK and Ireland. In 2012 the industry supported client businesses with a combined turnover of over £250 billion (€290 billion). Asset based finance forms an important part of the business finance toolkit.
