Goods & Passenger Operators: financial standing levels from 1 Jan 2020
Posted 07/01/2020 : By: Tim Ridyard
- First vehicle: £8,000
- Additional vehicles: £4,450
The total amount required is for the entire licence authorisation, regardless of the number of vehicles actually used on the licence at any given time.
The ability to satisfy financial standing is mandatory and an ongoing requirement.
The amounts required for Standard licences are reassessed annually on 1 October by reference to the value of the Euro against Sterling. The current levels today are very much higher than some years ago, e.g. on 1 January 2016, they stood at £6,650 / £3,700 (i.e. ca 17% lower). It remains to be seen what the valuation will be in October 2020 for January 2021 onwards and indeed how the amounts may ultimately be fixed post-Brexit.
The amounts required for Restricted licence holders also remain unchanged, as they have for many years, at £3,100 for the first vehicle and £1,700 for additional vehicles. (The Senior Traffic Commissioner initially consulted on reviewing the approach to the fixing of those levels in 2018. The outcome was inconclusive and it is to be further considered).
Financial standing: an ongoing problem area
A failure to comply with this may lead to serious consequences, not least the revocation of the licence.
How financial resources are regarded as being ‘available’ to operators is less than straightforward in many cases and can feel incomprehensible. Many operators are unwittingly breaching the requirements. There is a widespread lack of understanding as to how the financial standing regime operates, placing the licence under threat where funds are not adequate and ‘readily available’. By way of example, financial resources required for a limited company operator must be held by that entity – funds in a director’s personal bank accounts are not regarded as being available to such an operator. Conversely, in some circumstances, operators may in fact have sufficient resources but not realise this is the case.
There will be situations where a business encounters financial problems such that it cannot meet the financial standing requirement. Often this may be through no fault of the business, e.g. where an important customer’s business fails leaving the operator owed large sums of money. This needs to be notified to the Traffic Commissioner if it means the rules cannot be complied with. However, it is open to operators to apply to the Traffic Commissioner for a ‘period of grace’ within which to demonstrate it can meet the requirement. Traffic Commissioners are mindful that businesses will encounter genuine problems from time to time meaning that this needs to be applied for.
Where it comes to the attention of the Traffic Commissioner that finance cannot be satisfied a letter will be issued to the operator indicating that the licence will be revoked in the absence of further evidence or a request for a hearing. Typically Office of the Traffic Commissioner scrutiny of whether an operator has sufficient funds takes place in various situations, including:
- on five-year licence renewal
- on the application for a licence increase (when it sometimes emerges that there are insufficient funds for the existing licence meaning the application must be refused)
- where an operator is called to a public inquiry.
Many operators do not monitor on an ongoing basis their ability to fulfil the requirement but should do so. The detailed approach to financial standing is to be found in Senior Traffic Commissioner guidance but specialised legal advice should be taken where necessary to explain how this is applied.
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