ABFA Code of Conduct

All of the factoring companies that we deal with are committed to the new ABFA code of conduct with training sessions being held to ensure that all staff members fully understand the Code.

The factoring companies are contacting their introducers to confirm that they are fully compliant with the code and outlining the terms on which they will do business with the brokers. We have already seen and responded to a fairly lengthy agreement from one of our panel of factoring companies and have today received a much shorter version from another factor which I thought I would reproduce in part so that those sceptical onlookers could see how seriously this matter is being taken:-

“As a member of the Asset Based Finance Association (ABFA), XYZ Factors is committed to implementing the new Code of Conduct which comes into effect from 1st July 2013.

The aim of the Code is to ensure that clients are treated with honesty and fairness with all facilities operated in a professional and transparent manner.

With these principles in mind the code requires that:

All terminology relating to notice periods, termination fees and collect out fees must be clear and transparent. All collect out fees will need to be justifiable and the ABFA Member may have to provide confirmation of how the collect out fee was calculated.

Furthermore the Code does not allow for any payment to a third party of any portion of a collect out fee.”

Needless to say Factoring Solutions is more than happy to subscribe to those ideals and will in fact only deal with factoring companies who are fully committed too

ABFA Code of Conduct

I have been one of the most outspoken of critics of the ABFA in the past for it’s perceived unwillingness to police it’s members but following a coffee with Kate Sharp the CEO of the ABFA recently I have been converted to the light.

The Code of Conduct will never be all things to all men but it’s certainly a good start with the real movement forward coming from the establishment of a Professional Standards Council for the factoring industry plus the appointment of the Ombudsman Service to provide it’s services for dispute resolution.

The Professional Standards Committee will not just be factoring industry insiders but will include a number of external heavyweights as well and it’s their job to ensure that high standards are set and maintained.

I was quoted recently by a national newspaper as saying that “those [lenders] that like to skate on thin ice will continue to do so knowing that ABFA have no teeth or the will to grow any.”

Kate assured me that there is a rather large set of canines growing rather nicely at the moment and the ABFA will use them if necessary to either nibble or bite hard on any of their members that might be considered to be bringing the industry into disrepute.

Having been publically critical I’m happy now to withdraw my reservations and give the ABFA the opportunity to put it’s plans into operation in the hope that it goes a long way towards obviating the need for regulation

ABFA Code of Conduct

The long awaited code of conduct from the ABFA has been announced and this will be coupled with an independent system of dispute resolution managed by Ombudsman Services.

Further good news is that the ABFA is also establishing a Professional Standards Council which will be mainly comprised of members outside of the industry, and they will consider issues emerging from the complaints system and make recommendations on actions to further repair and enhance the reputation of the industry.

In theory this is good news but it does depend on the will of the ABFA and it’s members to clean up their acts.

One interesting point in the code is that all factoring companies will be required to include a note in their Agreements saying that a commission will be payable to the introducer which I’m sure won’t cause any heartache but the next clause insisting that each factoring company shall provide full details in writing of the amounts involved and the method of calculation of any future commissions if requested, might cause issues for some of the larger broking outfits who insist on commissions way above the levels that are deemed to be the norm within the industry.