Get your HOUSE in order

06 January

Get your HOUSE in order

It’s the start of a new year and tradition normally dictates a range of new year resolutions – eat less chocolate, join a gym, sign up for a marathon (perhaps optimistic) and vow to arrive in work earlier. Familiar aspirations? But how about new year resolutions for your business?

It’s 2020 and in unmistakable BHJ marketing style we are embracing the year of 20:20 vision. You’ve got it – 20:20 vision regarding the management of your compliance (financial standing, maintenance – DDR procedures, PMI schedules – drivers’ hours/tachographs) together with the tricky management of your people.

Speaking at an Association event in November, North-West Traffic Commissioner, Simon Evans, highlighted the key areas that operators need to have on their radar, namely:-

Bridge Strikes

Whilst the new kid on the block in 2019 (an astounding average of five bridge strikes occur daily) there will be little leniency for operators appearing in front of the Commissioners in 2020 where the relevant policies and strategies for handling bridge strikes should be common-place and proven. Training is also key for operators and a reiteration of the frequent high-risk occasions such as: –

o Absent mindedness – perhaps once the last passenger has been dropped off;

o When a vehicle is not in service;

o A driver who normally drives a single, not a double-decker;

o Car related satellite navigation issues;

o Poor route planning;

Transport Management and the expectation to deliver effective and continuous management of all maintenance related activity;

Tachograph and drivers’ hours – the TC’s want to see paperwork covered in coffee stains as this demonstrates that the findings have actually been reviewed rather than being blindly filed away without appropriate analysis;

Driver entitlement. Despite the industry-wide shortage of drivers, it is becoming increasingly important and a mandatory expectation on operators to check driver entitlement and to continue reviewing this;

Financial Standing. Whilst the figures remain unchanged for 2020, this does not mean that operators can sit on their laurels. 2019 saw an increasing number of operators failing to satisfy financial standing requirements. This was either due to a genuine lack of available funds or, perhaps more frequently, operators did not appreciate how financial standing is assessed and/or the sources of funds deemed acceptable. With this in mind, what evidence will be considered?

o Evidence the Traffic Commissioner can take into account is set out in the Senior Traffic Commissioner’s Statutory Document No 2 “Finance” available on the gov.uk website.

o Primarily, operators are entitled to rely on their annual accounts provided that they are certified by a properly accredited person and if those accounts show capital and reserves over the financial standing figure. Usually, certification of those accounts is provided by an auditor and such certification is generally mandatory for companies with a turnover exceeding £10.2m but an operator can choose to have their accounts certified if they wish.

o More recently, there has been a move by Traffic Commissioners to not accept the submission of certified annual accounts – they still want to check the cash reserves. (Whilst we do not agree with this approach, as we do not believe that the Traffic Commissioner has such a discretion in these scenarios, operators need to be aware that this may be the approach that the Traffic Commissioner takes with them.

o If the operator does not submit certified annual accounts, the UK has exercised its right under EC 1071/2009 to allow derogations for additional evidence of financial standing to be accepted. Cash in the bank, available overdrafts and unused availability on invoice factoring facilities can all be used as evidence of financial standing, providing that these accounts are in the operator’s name. The Traffic Commissioner will check the funds available in these accounts over the last 3 months (in the case of an existing licence) or 28 days (in the case of an application) and take an average of the sums available.

o Historically, some operators sought to demonstrate financial standing by way of the availability of a working capital loan facility. These appear in the Senior Traffic Commissioner’s Statutory Document No. 2 “Finance” as an acceptable method of showing financial standing but, over the past 12 months, the Traffic Commissioners have required operators to draw down the funds from the loan facility to show that they are “truly available”.

o Another traditional method of demonstrating financial standing was through the use of unused credit cards in the operator’s name. Now, however, if the vast majority of the sum required for financial standing is being demonstrated by reference to credit card availability, the Traffic Commissioners are tending to refuse to accept this as evidence on the basis that credit card APR’s are often high and an expensive form of borrowing; the Traffic Commissioners therefore question whether such funds are “truly available” as they are likely not to be used.