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BUPA’s payment practices exposed


The Small Business Commissioner, Paul Uppal, has published a report on BUPA Insurance Services Ltd exposing their poor payment practices and inadequate offer of late- payment interest to a small-chain supplier. Small business, Blacklight Advisory


Services Ltd, approached the commissioner on 28 January 2019 regarding the late payment of consultancy fees owed by Bupa Insurance Services Ltd. They submitted an invoice for £29,403.76 on 2 November 2018 based on 45-day end of month payment terms, however payment was not received on the due date of 15 January 2019, despite chasing on numerous occasions. Bupa Insurance Services Ltd responded


positively to the commissioner’s investigation, immediately approving and releasing the overdue payment which was made 15 days outside of the contracted terms. Bupa Insurance Services Ltd acknowledged


the late payment by offering a claim for late- payment interest at 2% above the Bank of England base rate for the value of the invoice. The reason provided for the delay was an unspecified error in the invoice- approval process and staffing inefficiencies, amongst blaming the complainant for not following the recommended invoice- submission process. However, the complainant submitted their


invoice based on procedural instructions provided by the relevant directorate whilst being reassured on several occasions that the invoice had been received and authorised. Bupa Insurance Services Ltd has


recognised that they did not meet their agreed contractual payment terms. The Late Payment of Commercial Debts


(Interest) Act 1998 sets a statutory value of 8% above the Bank of England base rate for interest that is chargeable on late-paid debts. In addition, the act allows compensation to be charged at statutory defined levels dependent on the value of the debt. The act also allows the remedy for late-


paid debts to be varied or ousted from the statutory defined values as an agreed contractual remedy.


September 2019 The commissioner did not consider the


variation to 6% below the value defined in the Late Payment of Commercial Debts (Interest) Act 1998 a considerable remedy or deterrent for late payment. Bupa Insurance Services Ltd stated that


they offer preferential 30-day payment terms to small businesses, however, this policy was implemented after commencement of the complainant’s contract. The complainant requested a variation in payment terms to 30 days, but this was rejected and Blacklight Advisory Services Ltd were held to their original agreement. The commissioner made the following


recommendations: l Bupa Insurance Services Ltd review the agreed remedy set out in their standard framework contracts. l The value of the remedy should be agreed after considering the bargaining position of the small business, effect of late payment on the small business, commercial certainty, and benefits of being a supplier. l Bupa Insurance Services Ltd should increase transparency by promoting their preferential payment terms to its small business supply chain. l Small businesses are offered 30 days payment terms as standard. Mr Uppal said: “I am witnessing variations


from the statutory defined value of late payment more frequently in contractual agreements. “It seems that small businesses are being


pressured into accepting these terms if they wish to supply large businesses as part of standard framework agreements. “A substantial remedy for late payment


should be substantial. It should adequately compensate the small business for impacted cashflow, and any additional resources required to chase outstanding invoices. “The remedy should also act as an


incentive to ensure payment is made on time. I do not consider a contractually agreed variation of late-payment charges at 2% above the Bank of England base rate, from a global company, sufficient.”


www.CCRMagazine.com Opinion


‘Landlords likely to buy via limited companies’


Our latest research has revealed landlords who are planning to add to portfolios in the next year, are much more likely to do so via a limited company vehicle. It revealed while only 14% of landlords


said that they would be seeking to purchase property over the next 12 months, over half of those (55%) would do so via a limited company, up from 53% in the quarter-one iteration of the research. Now 24% of those who said they would be


purchasing would do so as an individual – down from 26% three months ago, while 13% said it would depend on circumstances at the time. Close to seven in 10 landlords said they


would be using a buy-to-let mortgage to fund their next purchase, with the same number saying they used an adviser to arrange their most recent buy-to-let mortgage. This number was higher for those with


larger portfolios, with 75% of those with six to 10 properties using an adviser and 72% of those with 11 to 19 properties. Those with only one property were more likely to have gone to a lender direct, with 31% having chosen this method of finance for their last buy-to-let mortgage, although the average for all landlords was less at 20%. It is clear that the majority of those


landlords who will be purchasing over the next 12 months, intend to do so via a limited company, while we are also seeing a growing number of landlords willing to take the stamp-duty hit in order to move properties from their individual name. Clearly, if this new government were to


provide any stamp-duty incentive to landlords, as well as residential homeowners, we might expect such a trend to grow rapidly. Whether this is on the agenda alongside potential cuts to stamp duty for those purchasing their main home, remains to be seen.


Jeff Knight Director of marketing, Foundation Home Loans


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