Factoring trade body to create self-regulation system

25/03/2013

Following a marked rise in demand for alternative means of financing such as factoring, The Asset-Based Finance Association (ABFA) has announced it is to create a self-regulation system in order to boost understanding of its role in the sector.

The association – which is the trade body for providers of funding based on company assets such as invoice discounting and factoring – has said that the main aim of the system is to raise trust in - and understanding of - alternative financing. The body has also spoken of the “sharp increase” in demand for its member services as a result of the credit crunch which made traditional means of financing far harder to secure.

An increase of more than 21 per cent in the amount of money advanced by the 40 lending institutions that are ABFA members, was seen between 2009 and 2012, which took the total figure to £16.7 billion.

ABFA chief executive, Kate Sharp, told The Financial Times: “This is a positive evolution for the industry and will give current and prospective clients further confidence in asset-based financing.”

A deadline of 30 June 2013 has been put in place for ABFA members to become fully compliant with the new code of practice, which includes a dispute resolution process overseen by Ombudsman Services, a separate non-profit body.