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Offering Weekly Payments Legalities

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  • Offering Weekly Payments Legalities

    I'm not sure if this is right section, it was a toss up between this and the Small Business section, but I thought this section was more relevant. I run a small company supplying industrial supplies to engineering and automotive customers. I'm considering putting a mobile sales van on the road and offering some sort of weekly payment scheme. This seems to work for similar businesses to mine as well as others, take pay weekly carpet companies for instance.

    I have some concerns though and I'm looking for some advice with regards to my legal stance in recovering any monies owed. I've spoken with the FCA and from my understanding I can offer credit to customers in the form of Unregulated Consumer Credit pertaining to my own set of terms and conditions, provided the value doesn't exceed a certain threshold, there is no interest and the duration of the payments is not more than 12 months.

    I'm not looking to prey on vulnerable people or give credit to people that can't afford it, I would have certain procedures in place and I would be happy to work with customers to find a solution if they couldn't afford to pay. That being said, I run a small family owned business and I can't afford not to get paid, so I need to make sure I can pursue any monies owed, legally, if the need arises.

    In my case I'd like to offer a sort of rolling account, customers/consumers can have a small credit limit and payments are spread over 8 weeks. Customers can make purchases as they please and payments are made weekly over 8 weeks from the date of the invoice. So the amount due each week would vary depending on what the customer had purchased.

    Is it legal to offer this type of credit without being a licensed broker? If I ever had to would I have legal recourse to pursue the debt with this kind of finance?

    Any advice would be greatly appreciated.
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  • #2
    Would you only be dealing with other businesses or with individuals as well ? ( like snap-on - they are fca authorised )
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    • #3
      No it would be individuals only, I know Snap On dealers are FCA authorised but there are loads of businesses like Snap On and others like Pay Weekly Carpets for instance that are not FCA authorised.

      I've already spoken to the FCA and there's a good chance I will be applying for a credit brokers licence in the near future to offer 3rd party finance deals on larger values over a longer period. This type of finance is interest bearing and over more than 12 months so I need a licence before I can offer it.

      In the meantime I'm planning to offer interest free finance via a 3rd party that is to be paid within 12 months, I don't need a brokers licence for this and the 3rd party will have all the legal agreements for the customers to sign.

      The 3rd party finance is for moderate values though, I'd like to offer my own pay weekly scheme for values up to something like £500. I know that I could sell goods to someone on a pay weekly basis, get them to sign an agreement and I would be legally within my rights to recover my money if I had to.

      The problem is, that I would like a customer to fill in an agreement and then I'd give them a rolling £500 limit, so they could make purchases within that credit limit and the payments would be spread over 8 weeks from the date of invoice. I don't want them to have to sign an agreement every time they purchase something.

      This is the bit I'm unsure on, so far as I can tell this is not legal despite there being lots of companies doing it, the problem then is that I'm not within my legal rights to recover the money because the agreement wasn't legal to begin with. Is this the case?

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