This is part of a series of blogs on the Small Business, Enterprise & Employment Bill (“the Bill”) that is proposed to come into force in April 2015. The Bill is currently undergoing readings before the House of Lords following the 1st reading on 19 November 2014 and the 2nd reading on 2 December 2014.
This series of blogs is intended to discuss the topics proposed in this Bill and the consequences it may have to all, mainly in respect of the corporate aspects. The Bill is intended to make various provisions for businesses and individuals, including the regulation of companies, director disqualification matters and insolvency matters.
Please note that this Bill is not yet written into legislation and may suffer a number of changes during its readings and passage through Parliament. This series of Blogs is intended to address the changes proposed in the published Bill and is not intended to comment on the eventual legislation introduced by Parliament.
These changes will be extremely important to the above parties and it cannot be emphasised too strongly how important it is that you are prepared for these proposed changes. At Francis Wilks & Jones we can advise on all matters subject to these Blogs.
Small and Medium-sized businesses – publicity of credit history
Section 4 of the the Bill provides the Treasury with the power to introduce regulations on credit record information, with banks and credit reference agencies being required to publicise information on companies.
This is obviously part of the Secretary of State’s overall objective to restrict fraud and improve transparency within most companies and in theory is welcomed. These provisions are intended to enable the Financial Conduct Authority to obtain further supplementary powers to assist it in policing compliance and conducting investigations into small and medium-sized company’s affairs.
However, the risk with such regulations is that the widening of credit reference information could lead to funding difficulties for companies which are start-ups or are undergoing restructuring and it may also lead to finance becoming more expensive for some companies.
There are of course provisions in the Bill for such regulations to provide a power for companies to seek injunctions against any such disclosure or even restrict or delete any such credit information held but it is questionable whether a company always has resources to take such potentially costly legal action.
However, as of writing, the Bill is intended only to provide the power to the Secretary of State to make such regulations and it is essential that all companies ensure they are ready should such regulations be subsequently introduced.