My personal bank (Cater Allen) has refused to open an account for my business because there is a charge registered in my favour, from 1991. This was registered when the company was set up, as standard practice. However the company has not had any loans for many years.
No other bank I have used has had this problem before; I've opened various Ltd Co current accounts (no borrowing facilities) without problems and all had a similar charge on them.
I told everyone I have spoken to at their call centre that this is daft because since they will bounce a cheque if I overdraw by one penny they don't have any exposure. And a charge is meaningful only if the chargeholder is owed money. They agree with me but say it's a policy and nobody at the call centre can change it.
Has anybody else come across this?
I am moving my banking elsewhere, which is a shame because CA are quite good, with polite call centre people and no waiting on the phone.
It is a good idea to have a long-ago-lodged 1st charge on your own company, in your favour. That way, if anybody wants to sue it and push it into liquidation, they are unlikely to get much out of it because all you have to do is vote yourself a big salary and you will be the first in line for any assets :)
I can't see why I should remove the charge just to open a stupid current account. I have opened several current accounts for similar companies (with a charge) and no other bank had a problem with the charge.
Maybe they don't like the way you do business. They may see this as indicative of your attitude to suppliers generally. This isn't a criticism of you but this might be the reason for the bank's general policy.
Cater Allen, if it still exists as an independent company rather than as a subsidiary of Santander, is a tin-pot little Manx bank for people who would rather pay the tax man as little as possible.
I'd like to know how you arrived at that astonishing insight.
I have had a perfectly well conducted personal current account with that bank for some years. No problems until now.
As regards my business, that has also been conducted in an exemplary fashion for about 20 years. No loans, no debts, trade creditors paid on 30 day terms.
I'd like to know what EXPOSURE a bank has by running a non-overdraft account for a company which has a registered charge on it. Any offers?
You said: "It is a good idea to have a long-ago-lodged 1st charge on your own company, in your favour. That way, if anybody wants to sue it and push it into liquidation, they are unlikely to get much out of it because all you have to do is vote yourself a big salary and you will be the first in line for any assets"
To my mind that attitude stinks.
It's not a question of simply suing the company - it would apply to any creditor.
It's not "astonishing insight" - it's basic common sense. Good luck with your quest for a bank account. I certainly wouldn't want to do business with you either.
I don't think you have ever run a manufacturing business. Are you an accountant, perhaps?
There is an old concept which already limits personal liability. It is called a Limited Company :)
The problem is that most small businesses are not some huge entity with hundreds of employees; they are the proprietor's livelihood, and have limited resources.
And business generally has a significant % of bullies in it, who threaten litigation in the hope of getting some kind of concession. The bully will always win because the target company doesn't have the resources to defend itself - even at the initial cost of a half decent commercial lawyer at £250/hr plus VAT. A charge as described helps to discourage that kind of behaviour.
Obviously one hopes to never have to do this. It's no different to credibly threatening to sue a cowboy builder; I have just yesterday managed to get one such cowboy to cave in, after fobbing me off for 2 years. It took a surveyor's report detaining the bodges to do this. He waited till the last minute. Again, you hope to never actually sue...
On the contrary - you pay off all creditors, otherwise one of them will get a CCJ and bang goes your livehood. The charge merely discourages some frivolous attack. It would never actually get invoked because doing so will also terminate the business.
You won't have to :)
But tell me this... you would not do business with a company which has a charge registered in favour of a BANK which has lent the company say six figures? You better get real because that will rule out the majority of companies in the UK. It's virtually impossible for a "small" company to borrow money without landing itself with a fixed and floating 1st charge in the lender's favour, and the lender WILL be pretty quick to pull the plug on the company if they get cold feet. And they do this all the time.
But I am still looking for a rational explanation as to why a bank should care. They have no liability that I can see.
It's quite simple, really. The majority of their customers will, as you yourself said, arrange and use overdraft facilities. By insisting as a matter of policy that their clients not have any prior charges, it reduces their risk of not being able to get back money they lend them.
Although your business may not require overdraft facilities, at least not at this time, that puts you in an insignificant minority, and they just can't be bothered to administer policy exceptions for rare cases.
It seems quite reasonable to be unreasonable when it's easier than being reasonable. :-)
Obviously I can make my point better than you. If that's the extent of your understanding I would try something which doesn't need understanding.
Most sensible people would understand that if somebody is making a frivolous claim then they don't need to spend money on lawyers to show that the claim is frivolous. If the claim is genuinely frivolous they would get their legal expenses back anyway.I know somebody who has a lowly paid administrative job and she's spend £6k on a claim that she should win. If she can afford it than a guy who "runs a manufacturing business" shouldn't have any problem.
Well, as I am sure 1 or 2 here will be pleased to hear, the bank had the last laugh - or so they think. They must have been reading this thread, because they have just terminated both of my two accounts :)
The accounts had been conducted perfectly for the whole time (maybe 5 years) so it must have been triggered by this situation.
I was on the way out anyway due to various annoying things e.g. their "deferred" Visa debit card is not recognised by a number of establishments so e.g. I could not use it to fund my online dealing account (and their "computer says no" setup meant they showed zero interest in getting their IT dept involved), so I had other accounts set up already.
The signatory of the termination letters is not contactable, apparently, and they don't have to give a reason.
I guess they do what quite a lot of big firms do and pay somebody to monitor the internet for unfavourable publicity. I found one satellite telecomms firm doing that recently; their customer service was total crap but they were organised enough to find an obscure post in Usenet, and they asked me to remove it. I didn't because it was 100% true, was a very neutral question on whether anybody else had the same issues, and because it was expiring anyway after 5 days. If only these people put the same resources into intelligent customer service.
And as a postscript, the funniest thing happened... a week or two after the bank terminated my two accounts with them, and would not discuss why, I got a very pretty package from them saying my account has been UPGRADED to "Platinum", enclosing a fancy brochure showing well dressed women stepping out of private jets.
Good to know their "Customer Service" is coordinated ;)
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