BBL application - Partnership

Funqi

Thanks Jeremy. I hadn't actually asked them to cancel it, but I suppose I have to now since they require a feeder account to put it into and they've refused my application for it.

I've been working so hard to clear down my debts and pay everything on time, now instead of helping, they're just trashing my credit score.

Jeremy535897

Lenders have their own methods of selection and don't typically look at credit scores.

mcmad1958

Hello,
I have applied for my feeder account with HSBC and i am waiting to hear their decision. Has anyone with a notsogood credit got a positive result from HSBC. I thought our credit history should not be considered when making a decision, however the form says that they would carry out a credit check.

Jeremy535897

mcmad1958 said:

Hello,
I have applied for my feeder account with HSBC and i am waiting to hear their decision. Has anyone with a notsogood credit got a positive result from HSBC. I thought our credit history should not be considered when making a decision, however the form says that they would carry out a credit check.

Credit checks are not required for a BBL, but the banks' rules seem to require them to do one for the feeder account, which seems to defeat the purpose of not having a credit check for many applicants.

[Deleted User]

Jeremy535897 said:

Credit checks are not required for a BBL, but the banks' rules seem to require them to do one for the feeder account, which seems to defeat the purpose of not having a credit check for many applicants.

To an extent I agree, but these people had chosen to run their business using a personal account against both the banks terms and conditions and accounting guidelines. If they had been managing their business correctly in the first place they would not need a feeder account*. The lack of a business bank account and the lack of separated personal and business finances are the cause unfortunately. 

*With the exception of those who bank with an institution which does not participate in the BBLS.

Jeremy535897

MadMattUK said:

Jeremy535897 said:

Credit checks are not required for a BBL, but the banks' rules seem to require them to do one for the feeder account, which seems to defeat the purpose of not having a credit check for many applicants.

To an extent I agree, but these people had chosen to run their business using a personal account against both the banks terms and conditions and accounting guidelines. If they had been managing their business correctly in the first place they would not need a feeder account*. The lack of a business bank account and the lack of separated personal and business finances are the cause unfortunately. 

*With the exception of those who bank with an institution which does not participate in the BBLS.

It does not follow that having a business account means you are a safe bet, and not having a business account means you aren't. If BBLs are supposed to be available without credit checks, that is what they should be. You could have a load of flags against your name when you have a business account, and a perfect twenty year record when you use a personal account. 

[Deleted User]

Jeremy535897 said:

It does not follow that having a business account means you are a safe bet, and not having a business account means you aren't. If BBLs are supposed to be available without credit checks, that is what they should be. You could have a load of flags against your name when you have a business account, and a perfect twenty year record when you use a personal account. 

I agree having a business account does not make you a safe bet, but it does mean you do not need to apply for a new account to obtain the BBL, so no credit checks. It is largely those who use personal accounts for business who appear in need of feeder accounts, which is where the credit checks kick in as it is new account opening, rather than the BBL itself.

For those with a business account the only checks are the basic soft checks for fraud prevention, it is those in need of a new business account who are having problems, a combination of needing to open a new account because they were not operating correctly and a poor credit record.

Jeremy535897

MadMattUK said:

Jeremy535897 said:

It does not follow that having a business account means you are a safe bet, and not having a business account means you aren't. If BBLs are supposed to be available without credit checks, that is what they should be. You could have a load of flags against your name when you have a business account, and a perfect twenty year record when you use a personal account. 

I agree having a business account does not make you a safe bet, but it does mean you do not need to apply for a new account to obtain the BBL, so no credit checks. It is largely those who use personal accounts for business who appear in need of feeder accounts, which is where the credit checks kick in as it is new account opening, rather than the BBL itself.

For those with a business account the only checks are the basic soft checks for fraud prevention, it is those in need of a new business account who are having problems, a combination of needing to open a new account because they were not operating correctly and a poor credit record.

You mean those with a business bank account with a BBL provider who they go to for the BBL. If your business bank doesn't offer BBLs, you are in the same position as those who have used a personal account. I could say that is anti-competitive, but that was built into the scheme by the advice to go to your business bank in the first instance. What I find wrong is that there is major financial risk (to the government at least) in making a BBL, but there is zero risk to anyone from opening a feeder account. Yet it is the feeder account that causes the rejections. I don't disagree that the applicants should have opened business accounts, but their applications should not be rejected because of this. There has been a lot of noise about new starters, part year results for SEISS, directors paid by dividend, directors taking an annual salary etc, and I can see why it would have been much harder to help these people out because of the way the support schemes work, but it would have been very simple to say that the same rules for BBLs apply to the feeder accounts required to set them up.

Grumpy_chap

Jeremy535897 said:

I could say that is anti-competitive, but that was built into the scheme by the advice to go to your business bank in the first instance.

In theory, there is no competition for BBLS as the rules have been set up to make the fees, interest rates and t's&C's the same across all banks at low cost.  In that case, if you have a business bank account with an institution offering BBLS, why wouldn't you just go there?  This is probably part of the way to keep the costs of the scheme down as much as possible.

Jeremy535897 said:
there is major financial risk (to the government at least) in making a BBL, but there is zero risk to anyone from opening a feeder account. 

I am quite sure the Government will have some scheme to recover defaults arising from BBLS.  Anyone seeing it as easy money they can avoid repaying because of the Government underwriting will be in for a shock.  

No doubt, this will be a burden on the banks first to exhaust their normal recovery actions plus an impact to company and Director credit ratings.

Jeremy535897

I doubt everyone would be too happy if they were told which bank to have their current account with, and I think the same should be said of BBLs, although it makes sense to stick with your own bank if you can.

My comment on risk was a relative one. There is no risk in a feeder account that I am aware of. There is considerable risk in a BBL. It makes no sense to apply stringent requirements to the wrong thing as a way to get round the supposedly free availability of BBLs.