Invoice finance industry self-regulates; a promise of better service

code of conductI have written a lot about invoice finance in recent months, including articles on how this form of business funding can help businesses find new working capital, and what to look out for when you are seeking such a facility.

Parts of the invoice finance industry have come in for a good deal of criticism over the last few years, as has virtually all areas of financial services, as well as corporate governance, Parliament, the police, the NHS, the media, schools and on and on…..  I would make the point that the respective ‘failures’ in all these areas does not necessarily make them bad products, services, industries or indeed organisations.  Social media is just one of the channels that has exposed a lot of poor practices in all areas of everyday life, and is slowly leading to improved performance and service from many of them.

Getting their house in order

To the invoice finance industry’s credit, their trade body, the Asset Based Finance Association (ABFA), has now put in place an updated code of conduct to address the criticisms that have been levelled at it.  This has been done to improve service standards in the industry and provide clients with an easy-to-use complaints procedure when things go wrong.

The new Code reads as follows:

2.1 Members of ABFA are required to set and maintain rigorous and exemplary professional standards in their relationships with clients and guarantors. To achieve such standards ABFA has established six key commitments which require that:

1. ABFA Members shall abide by this Code and all applicable laws and regulations. 

2. ABFA Members shall act with integrity and deal fairly and responsibly with clients and guarantors. 

3. ABFA Members shall provide clients and guarantors with all appropriate information in a timely and transparent manner. 

4. ABFA Members shall ensure that legal documentation issued by them is clearly and unambiguously written. 

5. ABFA Members shall provide effective and timely client services in accordance with their legal agreements. 

6. ABFA Members shall operate their own appropriate complaints procedures and ABFA may from time to time request details of such procedures and anonymised data as to their outcomes.

The industry body has also put in place a number of other structures and facilities to assist its members in adhering to the new Code:

  • Guidance document – given the broad nature of the Code and the potential for differences in interpretation, the ABFA has published a document providing guidance, detailing to members how they should comply with the six commitments of the Code.
  • New Complaints process – ABFA has also set up a new Independent Complaints Process which provides a mechanism for clients to seek redress when they believe they have been treated unfairly by an ABFA member.
  • Independent Standards Council – there is also a Professional Standards Council in place which oversees the Code of Conduct, the guidance document and the complaints procedure. The Chairperson of the Council is independent and the majority of the members of the body are also independent.


I believe this to be a significant step forward into the 21st Century for the invoice finance industry, embracing the post-financial crash demand for financial services to move to a more ethical way of doing business that is fair and equitable to all stakeholders.

There is of course still a lot to be done with industries where knowledge has historically been used as a tool by the seller to make unfair profits from the buyer.  This has been particularly the case in financial services and it must be said that there is no ‘silver bullet’ that will eradicate these practices in one fell swoop.

However, all changes for the better have to start somewhere, and I for one am delighted that the invoice finance industry has recognised the need for change (before it was foisted upon them by an outside body that didn’t understand) and has taken some major steps in the right direction.

Invoice finance

If you have any comments on this article or would like to discuss any aspect of it please contact me at or on 0845 689 8750.

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