Operator’s Licence – Financial Standing Requirements
20 February 2023
Financial standing is a continuing obligation throughout the lifetime of an Operator’s Licence which is routinely checked as part of the application stage (for new licences or variations to existing licences), the five-yearly renewal/continuation of the Operator’s Licence or if an Operator is called to Public Inquiry.
Operators who fail to meet the financial standing requirements on an ongoing basis risk having their Operator’s Licence revoked by the Traffic Commissioner and, unfortunately, this is something that the Team see all too often in that a number of Operators are failing to satisfy the financial standing requirements or who simply do not appreciate how financial standing is assessed and/or the sources of funds that will be acceptable.
James Backhouse has recently dealt with an Operator who was called to Public Inquiry for the sole issue of financial standing. Due to the ongoing effects of the COVID-19 pandemic and a personal issue concerning the Director of the operating business, it was clear that financial standing was not going to meet both as an average over the required three-month period or as at the date of the Public Inquiry itself.
As a result of submissions made on behalf of the Operator with a clear plan to ensure that financial standing could be met on an ongoing basis, the Traffic Commissioner granted a three-month period of grace to allow the Operator to be able to demonstrate that financial standing was met on an average balance over the required three-months.
Although a period of grace was granted, the Traffic Commissioner commented at the Public Inquiry that if the Operator was unable to satisfy financial standing at the end of the period of grace, “…the licence will – without a further Public Inquiry – be curtailed to the number of vehicles for which financial standing can be demonstrated or revoked altogether. No further period of grace will be given.”
As a result, a robust plan was put in place which involved the re-financing of the Operator’s assets.
The Operator was required to provide financial standing evidence for the preceding three months period but, unfortunately, the case remained that financial standing was still not met at the end of that period. All of this puts the Operator’s Licence – and business – in jeopardy.
Further, Backhouse Jones dealt with a Public Inquiry recently whereby the Traffic Commissioner presiding the case confirmed that financial standing issues due to the current economic situation is the biggest single issue that the Traffic Commissioners are dealing with at present.
How much is required?
The current financial standing rates are:
• £8,000 for the first vehicle and £4,500 for each additional vehicle for applicants for, and holders of, standard national/international Operator’s Licences.
• £3,100 for the first vehicle and £1,700 for each additional vehicle for applicants for, and holders of, restricted Operator’s Licences.
You can find out more here and use our calculator to give you a basic idea here.
Further information about the Statutory Guidance can be found here.
Where can I get help?
If you already know you do not meet the required financial standing levels, you are obliged to inform the Traffic Commissioner. We can assist you in making the relevant notification to the Traffic Commissioner and requesting a period of grace to provide you with the much-needed breathing space to get your HOUSE in order.
We also have a relationship with BACK Finance who are happy to provide Operators with a review of their finances and to look at creative solutions for meeting financial standing without the rigidity of some of the high street lenders. Please contact brett.cooper@backhouses.co.uk for more detail.
For further information and advice, please speak with a member from our Regulatory Team on 01254 828 300 or email the Team at Regulatory@backhouses.co.uk.
