Late payments REACH boiling point

New legislation could mean more red tape for businesses trying to avoid late payment problems, a credit referencing agency has warned.

The EU Registration, Evaluation, Authorisation and Restriction of Chemical (REACH) legislation, designed to lower risks from chemicals and provide safety information on substances used in manufacturing, could spell disaster for small businesses, referencing agency Graydon UK said.

The legislation could lead to an upsurge in company directors applying to Companies House for confidentiality orders, the agency warned, making it more difficult for businesses to gain access to their home addresses, ‘details of which are important in the credit scoring process’.

The company said the new confidentiality orders are due to be introduced as part of the Companies (Disclosure of Addresses) Regulations amendment to the Companies Act 2006, which currently allows credit reference agencies to gain access to directors' home addresses for credit scoring purposes.

Martin Williams, managing director of Graydon UK, said while company directors have the right to feel protected by the state, legislators need to take into account businesses which depend on the information as part of their credit policy decision-making process.

"There's no doubt this latest piece of legislation further erodes the quality and quantity of information available to the public via Companies House,” he said.

“This is a long-term trend following the disappearance from Companies House of full sets of audited accounts on the large majority of companies.

"This additional layer of confidentiality is unnecessary and could cause untold damage to UK businesses through warping the flow of information available to those making credit policy decisions, including those in firms conducting business activities which may seek Confidentiality Orders in the first place."

© Crimson Business Ltd. 2008