Anti-Competitive Behaviour of the Government
A few years ago there was an active industry with a good few hundred companies in the UK trading at varying levels of success, from big companies to small one man operations. This industry was just like any other, providing income and jobs to hundreds maybe thousands of people in the UK. This industry was the private numberplate industry.
That was until a Government agency, namely the DVLA, realised that they could make a lot of money from the private numberplate industry and decided to abuse their position and monopolise the market. They undertook extremely agressive marketing activities, from TV to magazine to Internet, and they basically “cleaned up” as the term would go. A Government agency basic abused their position, exploited it to great financial gain, and the end result was many businesses went into liquidation and many more lost their jobs. If this happened in the private business sector it would have gone through the courts with an anti-competitive law suit, but nothing happened, the Government which claims to encourage commerce did completely the opposite and did what in my opinion should be illegal.
Well guess what, it’s happening again!
Companies like one of my business, Quick Formations, are being forced by law to carry out very time consuming comprehensive checks on each and every one of our clients under the Money Laundering Regulations 2007. These checks not only take time, but also cost money too, and we must reflect these costs and time taken in the prices we charge. This isn’t just my business, but it is all businesses in my industry sector (that comply with this legislation that is, but that’s another story). However, what do Companies House do?
Companies House state that they are an “administrative” agency, who’s role is to store data for the public record. Yet, Michael Mouse is able to file forms 10, 12 and 288a with them and Incorporate a Limited company without question. He can use a completely fictitious address, he doesn’t even have to exist, and Companies House will incorporate this Limited company for Mr. Mouse without question. Mr Mouse can then go to one of a number of countries around the world to open a business bank account because a UK company does not have to bank in the UK, and then Mr. Mouse has all the tools he needs to launder all the money he likes out of the UK. By launder, and to quote the Governments own scare mungering about this required legislation, I mean to potentially finance terrorism. Companies House, a government agency, is openly flouting a legal requirements of the company formation industry. The businesses within the company formation agency must charge to cover the administrative burden of complying with this legislation imposed upon them, but Companies House by not complying with this same legislation do not and can abuse their position in the market. The DVLA story seems likely to repeat itself all over again.
However, I have a solution and have raised this to parliament. At first I thought it would come to nothing, but at least Sally Keeble MP is listening and has started to raise concerns and move them forward.
My solution is as follows;
All agents who provide a company formation service apply for an account with Companies House. The requirement of holding an account is that the agent must be registered with HM Revenue & Customs under the MLR2007 regulations, and as such comply with the regulations. Companies House then have no requirement to carry out due diligence on documents filed by that agent.
Any company formations filed by non-account holders will require due diligence, and Companies House will be required to operate under the same legal requirements imposed on all other businesses carrying out the same business activity. They will also have to cover their costs to carry out this activity, leveling the commercial playingfield.
Here is hoping that Sally Keeble can get some results on this.