Warning over fees charged by asset based lenders

A campaign led by a former business owner, Brian Moore, has raised a number of concerns regarding weaknesses in the asset based finance industry, and has called for government regulation.

The asset based finance industry is currently worth approximately £18b and enables around 40k UK SMEs to access funds, improving their cash-flow, by using their assets as collateral.

It has been alleged that some lenders are working with “friendly” administrators to exploit “termination fees” in an attempt to profit from business insolvencies – at the expense of HMRC and unsecured creditors. Moreover, the industry is not regulated even if the service is provided by a high street bank; this is a fact that has shocked those that have become enlightened to it, particularly as there is no overseer in times of crisis.

The industry’s trade body, The Asset Based Finance Association, has rejected the claims, stating that it “fundamentally contests the picture of the industry” that Mr Moore illustrates. HMRC has acknowledged the claims and is examining them.

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