Period of grace allowed after Brexit sees financial standing costs soar

George Barrow
December 2, 2016

Holders of a standard national or international O-licence that are unable to meet the new requirements for financial standing can apply for a six-month period of grace from 1 January.

Financial standing requirements for the first vehicle have risen by 18% year-on-year from £6,650 to £7,850, and by 17.5% for each subsequent vehicle – from £3,700 to £4,350 – after the post-EU membership referendum collapse in the value of the pound.

Financial standing is reassessed by the DfT every year according to the exchange rate between the pound and the euro on the first working day in October. Under EU law, the rate is set at €9,000 for the first vehicle and €5,000 for each additional vehicle.

The traffic commissioners conceded that the impact of Brexit on financial standing was enough to 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 traffic commissioner. The OTC said it would 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.

It also advised that any operators who are running with a margin between the number of vehicles specified and the number of vehicles allocated to an O-licence 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 traffic commissioner, Beverley Bell, said: “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.

“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,” she added.

The rates for restricted O-licence operators - £3,100 for the first vehicle and £1,700 for each subsequent vehicle nominated on the licence - and new applicants remain the same as previous years.

The main sources of financial evidence are:

•bank accounts

•building society accounts

•credit card statements

•overdraft facilities

•invoice finance agreements

•audited accounts

•assets that can be sold quickly (except for vehicle fleet)

In October the FTA warned that the rise on financial standing would come as a “sudden shock” to operators.


About the Author


George Barrow

George Barrow has been writing about nearly anything with wheels for the past 15 years, starting off his career in the car industry and ending up in commercial vehicles via a brief detour to cover technology, science and start-ups. Often found behind the wheel of a new product, his real interest lies in the business side of the automotive industry. George is the UK jury member of the International Van of the Year and International Pick-Up Award.

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