CM December DECEMBER 2018

CMNEWS
A round-up of news stories from the
world of consumer and commercial credit
Written by – Sean Feast and Alex Simmons
Companies House agrees
to act on Short-Firm Fraud
Philip King FCICM
Chief Executive of the CICM
“At this time of year
we see a number of
fake companies being
set up solely with the
purpose of acquiring
IT and electronics
goods by deception.”
PHILIP King, the Chief Executive of
the CICM, and James Campbell,
Secretary of The European Freight
Transport Association (EFTA)
have succeeded in their representations
to Companies House to challenge the
alarming increase in short-firm fraud.
Companies House will take steps to
display a more prominent warning on its
website regarding the efficacy and accuracy
of the information it holds, confirming that
such information has neither been verified
or validated. Companies House has also
agreed to create a dedicated email through
which businesses can raise concerns over
bogus accounts leintel@companieshouse.
gov.uk.
Philip King says the response from
Companies House executives was both
positive and encouraging: “Credit Managers
often rely on information from Companies
House to make important business
decisions, but need to be aware that such
information can, in fact, be fraudulent.
Credit Reference Agencies, similarly, use
information at Companies House to inform
their decision making, so it is in everyone’s
interest to ensure this information is
accurate.”
Short-firm fraud happens when
criminals set up an apparently legitimate
business intending to defraud its suppliers
and customers. Bogus accounts filed at
Companies House make the business look
substantial.
“Before Christmas, new orders and
new business opportunities tend to
increase. Fraudsters take advantage of
these busy periods, and natural ‘spikes’ in
activity, to commit crime. Only by sticking
to best-practice credit management, sharing
knowledge of risk with your employees in
what to look for, and being sure that you
‘know your customer’, can fraud be avoided.”
Philip says that some sectors are more at
risk than others: “At this time of year we see
a number of fake companies being set up
solely with the purpose of acquiring IT and
electronics goods by deception,” he says.
“Anyone witnessing a sudden and
unexpected increase in orders, or the
emergence of a new customer with whom
they have not previously done business,
should be alive to the potential for fraud,” he
adds.
gov.uk/government/organisations/
companies-house
THE Financial Conduct Authority (FCA)
has confirmed plans to extend access to
the Financial Ombudsman Service (the
Ombudsman Service) to more SMEs.
The changes will mean that SMEs with
an annual turnover below £6.5 million and
fewer than 50 employees, or an annual
balance sheet below £5 million, will now
be able to refer unresolved complaints to
the Ombudsman Service. Under the ‘nearfinal’
rules now published, around 210,000
additional UK SMEs will be eligible to
complain to the Ombudsman Service.
Respondents to the FCA’s January
FCA extends access to FOS for SMEs
2018 consultation strongly supported the
extension of the Ombudsman Service to
larger SMEs, charities and trusts, and a new
category of personal guarantors.
The changes will allow a wider number
of SMEs to access the service, so they can
seek redress. The criteria for access to the
service have been amended so that SMEs
must only meet the turnover test and one
of either the headcount or balance sheet
total tests, not all three tests as previously
proposed. The FCA made this change in
response to feedback that applying all three
tests would unfairly exclude certain types
of SME, for example those with relatively
low turnover but 50 or more employees.
The FCA has published near-final rules,
so the Ombudsman Service can start
taking practical steps towards putting the
extension of its remit in place, including
starting recruitment of additional staff with
the skills and experience required. The
FCA intends to publish final rules later this
year, following its normal scrutiny of the
Ombudsman Service’s draft business plan
and budget. It expects the final rules on the
SME extension to come into force on 1 April
2019. fca.org.uk
The Recognised Standard / www.cicm.com / December 2018 / PAGE 6