201509 CM September

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NEWS IN BRIEF SMART THINKING Equifax has launched Equifax Device Verifier, a service said to allow businesses to protect themselves against the risk of fraudulent activity when dealing with customers online. Using technology from anti-fraud company, iovation, Equifax Device Verifier assesses the risk of fraud associated with any device being used to make online purchases, including smartphones, desktops, laptops and tablets. equifax.co.uk CICM AWARDS OPEN Entries for the CICM British Credit Awards 2016 have now opened. The closing date for entries to be submitted is Friday 30 October. The glittering awards dinner will be held at the Brewery on 10 February. For further information go to cicmbritishcreditawards.com. (To see what it means to be a winner, turn to page 20.) CICM IN BRIEF This month’s CICM Brief includes… details of the CICMQ agreement with the Australian Institute, the news of the latest corporate partnership, application for online exams opens, and the CICM's straw poll on Britain's membership of the EU. CICM CREDIT COMMUNITY GROWS IN STATURE THE CICM Credit Community, instigated by the Chartered Institute of Credit Management (CICM) on LinkedIn, is generating record numbers of discussions and comments according to the CICM’s Head of Social Media, Tracy Carter. Tracy says that the concept of ‘community’ is one that clearly resonates with a credit management audience: “Networking and sharing are two fundamentals of personal and career development that credit managers recognise and openly embrace,” she says. “They are also fundamental to ensuring the continued success of the CICM and its members.” Growing the membership of the CICM is a key imperative for the Chief Executive Philip King, and he is encouraged to see how discussions around learning and development continue to be popular. But he is similarly interested in how businesses are continuing to seek professional credit management advice, especially when it comes to keeping the cash flowing: “In a recent discussion we asked the Credit Community members, ‘as an experienced professional, what would be the one piece of advice you would give to a small business to succeed and grow?’ “Not surprisingly, most of the comments related to the practical basics of good credit management such as knowing your customer, assessing the risk, invoicing promptly, and not being afraid to ask for payment when it’s due. “But the discussion made me realise that while such tips are useful they don’t resolve the more fundamental issue where a small business lacks the underlying skills and expertise needed to carry out the basics effectively. We often assume that a small business won’t have credit management skills in-house, and that’s not necessarily true. Many do. But there are still many who don’t and we need to point them towards alternative solutions.” Philip highlights the many different types of help that are available to small businesses through the CICM and its members, from the Managing Cashflow Guides to dedicated mentoring and support. He is also pleased with the recent government initiative to encourage greater numbers of apprentices, and the appointment of Anna Soubry, Minister of State for Small Business, to give a greater voice for small businesses at the Cabinet table. “Having people, or access to people, who are at the top of their game, well qualified, up-to-date on regulatory/ legislative issues, and who understand the true value and role of credit management will make a real difference to helping our small businesses grow and succeed,” he concludes. “And these people are typically Fellows and Members of the CICM.” linkedin - cicm 10 September 2015 www.cicm.com The recognised standard in credit management
CREDIT INSOLVENCY NEWS CIVIL LITIGATION COSTS IN INSOLVENCY THE Legal Aid, Sentencing and Punishment of Offenders Act 2012 introduced reforms based on recommendations by Lord Justice Jackson, who was critical of cost recovery arrangements that were common in claims made against government departments, particularly as regards success fees and insurance premiums where conditional fee agreements (CFAs) were in place. He felt these arrangements imposed a significant and disproportionate cost burden on the tax payer. The changes introduced rendered the success fee uplifts and premiums irrecoverable, but there was a temporary stay in implementation in respect of litigation brought by insolvency practitioners (IPs). The insolvency community successfully argued that IPs were in a different position to most litigants, as they were often seeking to pursue claims in circumstances where there were insufficient funds in the insolvency estates and would otherwise be prevented from taking action against directors and others in respect of misappropriated assets etc. Those actions, it was argued, depended on the ability of IPs to enter into CFAs, whereby the lawyers agreed they would be paid only in the event of a claim succeeding. Government departments such as HM Revenue and Customs (HMRC) would sometimes be beneficiaries of such actions, as would other creditors. The stay or exemption for IPs is due to be further considered. It was due to end this April, but has been extended for a further period. If IPs were unable to persuade lawyers to undertake work on a CFA basis, would recoveries and returns to creditors suffer? Are there alternative ways of unlocking the potential benefits for creditors? Third parties will sometimes fund actions. They often demand a high percentage of any proceeds, but can provide a solution where the value of the claim is substantial. With one notable exception, most such funders will not be interested in claims of less than £1 million, and that would rule out recovery action in many insolvency cases. Research by Professor Peter Walton, instigated by R3 and supported by the IPA and others, indicated that many claims are for sums in the region of £50,000. ALTERNATIVE PROVSIONS Another alternative might be the new provisions in the Small Business, Enterprise and Employment (SBEE) Act 2015; when fully implemented this will permit IPs to assign rights in actions such as fraudulent or wrongful trading by directors, and thereby realise some funds for creditors. Walton’s report of his findings was written before the terms of the SBEE Bill were settled, and initially the Bill only provided for assignment in the above limited instances. The SBEE Act now encompasses a broader range of assignable actions, including preference and undervalue transactions and so might now present a viable option for IPs. Walton’s report asserts that the IP’s inability to chase down monies would be detrimental to the public interest and remove an important weapon in the IP’s armoury. Whether that view holds sway when the exemption is reconsidered remains to be seen. Many will have their say in the meantime, including Lord Justice Jackson who retains an active interest in the subject. The Government may feel that the widening of the SBEE provisions goes some way to providing alternatives for IPs, though it is worth noting that the relevant provisions are not expected to be in force until October next year, at the earliest. That delay may reinforce arguments for an extension of the present exemption at least until then, but Jackson wanted to see his recommendations applied to all types of litigation and whilst there are some other exemptions for special cases, the argument for insolvency to remain as one of them may become more difficult to sustain. Part of the argument in favour of the insolvency exemption was that the costs abuses referred to by Jackson were not prevalent in insolvency cases. Findings based on compulsory (court) winding up cases where sanction for litigation was sought by IPs illustrate that worthwhile returns are possible (a 74p dividend to HMRC in one case, and a 23p dividend to ordinary unsecured creditors in another), but also suggest that costs of the liquidation can eat up all the proceeds of the actions in some cases, and many take a number of years to work through. Assignments might provide at least a quicker solution for IPs and therefore for creditors, potentially at less cost. The impact on recoveries and creditor returns is something that can only be assessed once any change to the present arrangements has been made, and after the new SBEE measures have been used for some time, at which point there should be some available evidence of usage of the new assignment provisions. The Walton report argues that removal of the CFA uplift might encourage more culpable behaviour by bankrupts and directors; if that were to hold true then of course the effect would be felt to a greater or lesser extent by creditors. David Kerr MCICM is the Chief Executive of the Insolvency Practitioners Association (IPA). CM The recognised standard in credit management www.cicm.com September 2015 11
Page 1 and 2: CREDIT MANAGEMENT CM THE CICM JOURN
Page 3 and 4: CONTENTS SEPTEMBER 2015 www.cicm.co
Page 5 and 6: You’re in safe hands Solutions fo
Page 7 and 8: NEWS IN BRIEF WORLDWIDE TEST CICM
Page 9: CICM NEWS D&B REVISES GROWTH FORECA
Page 14 and 15: FEATURE From a scorecard perspect
Page 16 and 17: CICMQ NEWS FIRST TIME ACCREDITATION
Page 18 and 19: ANALYSIS If he is happy to take you
Page 20 and 21: AWARD WINNERS THE WINNERS TAKE IT A
Page 22 and 23: INTERVIEW • CHARTERED INSTITUTE O
Page 24 and 25: LEGAL MATTERS WHAT TO DO IF A DEBTO
Page 26 and 27: OPINION DEBT DOWN UNDER Leigh Berkl
Page 28 and 29: LEGAL COLUMN CAROUSEL FRAUD Peter W
Page 30 and 31: STORM CLOUDS GATHERING 5 6 7 8 Jaso
Page 32 and 33: DATA & ANALYTICS BIG IS BEAUTIFUL S
Page 34 and 35: SOAPBOX CHALLENGE BEATING THE WRONG
Page 36 and 37: INSOLVENCY THE GOOD, THE BAD AND TH
Page 38 and 39: CM Credit Management magazine for c
Page 40 and 41: 2015 EVENTS CALENDAR BE AHEAD OF TH
Page 42 and 43: MONTHLY ROUND-UP OF THE LATEST STOR
Page 44 and 45: EDUCATION STEPCHANGE TO A QUALIFIED
Page 46 and 47: EDUCATION IS IT TIME TO GET QUALIFI
Page 48 and 49: in association with CCR credit exce
Page 50 and 51: www.portfoliocreditcontrol.com At P
Page 52 and 53: FORTHCOMING EVENTS 2015 FULL LIST O
Page 54 and 55: CICM BRANCH NEWS LONDON AND EAST OF
Page 56 and 57: DON’T MISS YOUR NEXT BIG MOVE IN
Page 58 and 59: NEW CICM MEMBERS THE INSTITUTE WEL
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Cr£ditWho? CICM Directory of Servi
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Cr£ditWho? CICM Directory of Servi
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201509 CM September

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