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View Full Version : Thinking about setting up a new credit protection service


BobPetcher
15th November 2010, 07:31
I have just set up a new business which simplifies the process of recruiting sales agents and is, consequently, very low cost. Similarly, I am considering setting up a web-based service designed to share information about the bad-payers of this world and carry out simple new account checks on behalf of members paying a small annual subscription.

This would not be a formal credit check as such but we would take up references and produce simple customer payment profiles which subscribers could recieve on request. In itself, a threat of being placed on a database such as this (I don't want to use the word blacklist) could prompt people to pay up a bit quicker.

I see the service as particularly suitable for companies dealing with small businesses. I have another company which is a classic example and wholesales jewellery. A large proportion of our customers for this are small home based, part-time businesses, party planners, e-commerce sites etc., and it is difficult or too expensive to get financial information on these people through the normal sources. We, generally take a lot of new orders from this market sector at Trade Fairs and are then faced with the choice of sending the goods and keeping fingers crossed or doing everything Pro Forma which 90 per cent of the time results in the order not being completed.

The service I have in mind would allow an informed decision. I am thinking of charging subs of £150.00 a year for the service.

So two questions for everyone here: What do you think of the idea and does anyone know what the Data Protection Act has to say about this sort of transfer of info within a group?

Geoff T
15th November 2010, 21:29
Could be dodgy Bob - paint it how you like, but "Blacklisting" is still what comes out of the tin...

Best of luck though - if you get it right let me know - I can think of [coughs] one or two names/firms that should be added to the list...

cpcm credit management
16th November 2010, 13:07
I agree with geoff. this could be a tricky area and I am sure some licensing may be required.

Ultimately balance sheet information is more valuable than payment records (which can be subjective anyway) and that is cheap to obtain (free if you know where to go)

Also, how would you get these references?

Sorry to pour cold water.... :(

BobPetcher
16th November 2010, 15:03
Balance sheets are fine but, as I said, in my original post, there are industries where a large proportion of business is represented by home workers; e-commerce, party planners, etc., where the information is not only not available but probably hasn't been prepared in the first place.

The gift industry where my main business operates is a good example of this and providing references is a key step in setting up an account. If there was service that took these references up on behalf of the supplier and held any information gleaned on a database I think that in the current climate, their could be a lot of takers.

You would obviously need certain safeguards to keep within the Data Protection Act but I think it could work

Frank Card
18th November 2010, 14:12
Data Protection Act possibly, but more to the point would be the Consumer Credit Act. You would be acting as a credit reference agent, defined as 'Those who provide information on the financial standing of individuals, being information collected for that purpose.'

In short, you would need to obtain a CCA licence.

Geoff T
18th November 2010, 17:36
No Problem there Frank - £900 odd quid to get... keeping it mind...