Retailers are turning the heat up on the Government to intervene in the credit insurance crisis.
Focus chief executive Bill Grimsey will meet a senior member of Business Secretary Lord Mandelson’s office next week to urge decisive and speedy measures.
Grimsey said: “British retailing should stand up for itself. Credit insurers should be held up for what they are – fair-weather friends. Government has to recognise that it needs to support retailing and the supplier base of this country.”
Retailers are still awaiting an announcement on the issue, which had been expected early this year.
The British Retail Consortium also wrote to Mandelson this week advocating government action on the issue, while the Association of Convenience Stores wrote to the Chancellor, Alistair Darling.
BRC director of business and environment Jane Milne said: “An announcement has been imminent for some time. It’s becoming incredibly urgent the Government acts.”
Last month Mandelson responded to a letter from Grimsey that highlighted the power credit insurers have over retailers. Mandelson replied that the Government was investigating the matter.
At next week’s meeting, Grimsey will suggest the Government should eventually take charge of the credit insurance market, with a regulated credit assessor being appointed.
Grimsey said that in the short term the Government needs to “urgently put a scheme in place” where it will underwrite credit insurance. He will argue that credit insurers should be “subject to an inquiry because their due diligence and their explanations for their decisions are inadequate”.
He said: “We need to put credit insurers out of business. Their product is out of date and should be reassessed.”
Focus has written to its suppliers’ insurers informing them it will no longer allow them access to its accounts. Instead, Focus will provide financial information straight to suppliers.
UBS analyst Andy Hughes issued a note this week detailing a meeting he had with credit insurer Euler Hermes. In it he revealed the insurer suggested it is “only part-way through the withdrawal of credit from suppliers to UK and European retailers. The message for non-food retailers is the worst is yet to come”.
A Business, Enterprise & Regulatory Reform spokeswoman said: “It’s important we carry out a full analysis to ensure we deliver the type of help firms need while offering value for the taxpayer.”