ABFA reacts to profiteering claims and says accusations are ‘inaccurate’

The Asset Based Finance Association has responded to accusations made regarding profits made by members by describing them as 'unfair'.

The Asset Based Finance Association has responded to accusations made regarding profits made by members by describing them as ‘unfair’.

The trade body for the asset-based finance community says that allegations from businesses entering administration against lenders relate to ‘a few unidentified cases’.
Kate Sharp, chief executive of the Asset Based Finance Association (ABFA), says that the accusations are being used unfairly to paint an ‘inaccurate’ and ‘grossly misleading picture’ of the industry.
Sharp’s response relates to claims that some invoice finance firms are profiting from administrations by exploiting a status as preferred creditor.
As a trade body, ABFA receives what it calls ‘a tiny number of complaints’ from users about either the industry or its members, amounting to 10-15 a year.
Sharp adds, ‘ABFA members seek to support growing businesses. We do not believe that they would ever abuse their creditor status to force firms into administration.
‘Unfortunately though, some of the funded companies will fail. The ABFA is aware of a very small number of people that, following the failure of their businesses, believe the finance provider could have done more to rescue the business.’
Brain Moore, from the Campaign for Regulation of Asset Based Finance, comments, ‘We are stunned that ABFA are not publically admitting what they must know in private, that some of their members are profiteering by putting viable companies into insolvency as secured creditors to gorge on termination and collection fees.
‘This is not a victimless crime such as Libor – real people are losing their livelihoods in the tens of thousands as viable companies are forced into insolvency so that the banks can pick the bones of the company bare.’
Moore adds that the body ‘strongly believes’ in a regulated asset-based finance industry as a way of funding UK companies.
As an unregulated industry, ABFA says it is aware that there is nowhere for aggrieved users to take complaints to. It is now drafting a code of conduct which will implement a revised code and complaints procedure and is due to be in force from 1 January 2013.
Sharp concludes, ‘We understand that government bodies will quite properly look into specific cases that are brought to their attention. However, it is not our understanding that there is any more general “investigation” into the industry on the back of the recent complaints.’
ABFA says that, if any investigation was forthcoming, it would be ‘very happy’ to work with the government to examine issues raised and then take forward any steps that stakeholders believe are necessary.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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