Operator Licence: Financial standing – Road Transport Law

As a holder of a Goods Vehicle Licence does my business have to continually demonstrate that it has sufficient funds to comply with the “financial standing” requirement on the licence? Can details of the business’ finances be requested at any time and what happens if my business has insufficient funds? Is the licence at risk or are there ways of getting around it? 

Businesses need to plan well in advance if they are considering making an application for additional vehicles or say an additional licence in another traffic area. Over the last 12 months more and more operators have been unable to prove the financial requirements in the first instance and their applications were determined at public inquiries. Ultimately, failure to prove finance can result in failures of applications, a reduction in fleet size and in some cases revocation of the licence. All instances could be commercially devastating. The Traffic Commissioners have no discretion to allow a licence to continue if there are insufficient funds.

So what can be done if faced with this issue? 

First of all you will be asked to show the sum required has been continuously available for the last 3 months. The best and simplest evidence is a bank balance or overdraft facility covering the amount required. Speak with the bank manager and explain the position and see if an existing facility can be extended, even if only temporarily. Many operators rely on factoring agreements but this will all depend on monthly turnover. Others release equity in existing assets of the business i.e. plant and vehicles, others secure loans. Seek professional financial advice. Most of all make sure the financial evidence is in order and well presented.

Essentially, an operator needs to face this financial hurdle early on, well in advance of contemplating an application. Bear in mind that if financial scrutiny reveals that you cannot prove the sum required for your existing fleet, let alone the five extra you are applying for, you may risk losing some of the fleet you already have. Consider the facts before making an application and get your house in order first.

Are you recording your brake tests correctly?

Each Periodic Maintenance Inspection Form must fully record how the brakes were tested and what the results were

• The type of brake test done must be clearly recorded e.g. Road, Tapley or Roller brake
• The result of the brake test must be clearly recorded  
• The brake testing regime MUST also include very regular and well recorded roller brake testing 

Too many Operators face regulatory action against their Operator Licences because their brake testing and reporting regimes are by no means robust enough. Operators and individual directors also expose themselves to huge risk if a brake related accident were to occur. 

Prison Sentence for Lorry Driver

A Feltham truck driver was sentenced to eight hours in prison for abusing drivers’ hours regulations. Following an investigation by VOSA, Jasvinder Arora of Feltham pleaded guilty to 79 offences of creating false driving hours records at Ipswich Crown Court on 9 August.

Arora created false records of the hours he had spent behind the wheel in an attempt to show that he had taken enough rest. In his sentencing, the Judge told him: “Driving a large HGV is a lethal weapon in the hands of a tired driver.” Heather Cruickshank, VOSA’s Operation Director said “Tired drivers are dangerous drivers. Not taking enough rest can lead to serious accidents and that is why driver’s hours rules are in place.

Various padlocks attached to a fench

Time for refresher training

A prudent Operator will ensure its drivers and key transport staff are refreshed at least annually on in particular effective driver defect reporting and drivers hours compliance. Training does not have to be complex or expensive. Often the most simple methods are the most effective and I can advise you on these. Ongoing systems for monitoring of staff performance will benefit you greatly.