Robin Hunter (Money Marketing, May 9) is correct in stating that IFAs may charge interest on overdue debts but I thought I would bring to your attention the changes to the Late Payment of Commercial Debts (Interest) Act 1998 that will come into effect in August.
From August 7, 2002, UK businesses will benefit from new European legislation. The new legislation will complement the UK's existing Late Payment of Commercial Debts (Interest) Act, which was to have been introduced in three phases.
The third and final phase was originally due to be implemented in November 2002, to allow all businesses and the public sector the right to claim interest from all other businesses and the public sector.
The EC directive will bring this final phase forward, thereby giving all businesses, regardless of size, the right to claim interest on late payment. It also has additional benefits including:
To allow creditors to claim a fixed sum of compensation should late payment happen. The compensation is to cover debt recovery costs,
To allow all businesses and public sector bodies to challenge contractual terms that do not provide a substantial remedy for late payment;
To provide SMEs with the right to have appropriate organisations act on their behalf and challenge contractual terms that try to remove or alter their right to statutory interest and
To create a reference rate which will be used to determine late payment interest rate. The late payment interest rate is the reference rate plus 8 per cent.
Guidance about the new late payment legislation can be found at the Better Payment Practice Group's website: www.payontime.co.uk.
Better Payment Practice Group