Requirement to increase to £7,850 for the first vehicle and £4,350 for subsequent vehicles
The UK Traffic Commissioners (TCs) are offering advice to operators and licence applicants to help them prepare for the revised standard licence financial standing tests.
The new levels, which take effect on January 1, will see an increase for standard licence holders and new applicants.
The levels are based on the Euro exchange rate on the first working day of October each year.
The requirement for the first vehicle on a standard licence or application will be £7,850 and for each additional vehicle it will be £4,350. The rates for restricted licence operators and new applicants remain the same as previous years.
As a result, TCs are giving advice to the industry on how to prepare for the new levels.
Operators who are planning to apply for more vehicles, upgrade their licences or are due to appear at a hearing, will be asked to provide evidence of financial standing at the new rates. The TCs said they want to make sure operators know how they can demonstrate financial standing and what options are available if their evidence is not sufficient.
The main sources of financial evidence are:
- Bank account statements;
- Building society account statements;
- Credit card statements;
- Overdraft facilities;
- Invoice finance agreements;
- Audited accounts; and
- Assets that can be sold quickly (except for the vehicle fleet).
If an operator is not able to show financial standing at the new rates using this evidence, they can ask the TC for some time to address the shortfall – a ‘period of grace.’
TCs can consider giving an operator up to six months (but no longer) to meet the financial standing levels on a permanent basis.
A period of grace must be requested in writing to the TC. They will need to see tangible evidence that the period of grace will be worthwhile and that financial standing will be shown when the period of grace ends.
Operators may wish to take legal or similar advice first before they make a request for a period of grace.
There are other alternatives operators can consider. Financial standing is assessed on the number of vehicles authorised on the licence, regardless of how many are in operation. Any operators who are running with a margin may wish to consider reducing that margin, without affecting the number of vehicles that are actually being operated, in order to satisfy the financial standing levels.
Senior TC, Beverley Bell, said: “TCs understand some standard operators and licence applicants may be concerned about the increase to the standard licence financial standing levels for 2017.
“The financial standing requirement is mandatory so we have to apply the rates to all operators and licence applicants. However, we recognise that some businesses will feel the impact of the increase more immediately.
“That’s why we want to make sure operators and licence applicants know what they can do if they are not able to meet the new rates through the traditional methods, such as bank statements.
“In certain circumstances, TCs can give operators time to address any shortfall in the financial standing requirements through a period of grace.
“We have advised staff dealing with applications and regulatory hearings to be mindful of the impact of the increase when dealing with operators and giving advice on alternative ways of satisfying the new rates.”