The Tribunal upheld the decision to refuse the licence, stating the TC was ‘rightly sceptical’
The higher the dependence on credit cards to show financial standing, the less likely it would be that an operator would in fact use the facilities if required to do so because of the high cost of that borrowing, a Tribunal has said.
The refusal of Traffic Commissioner (TC) Kevin Rooney to hold that credit card balances alone were sufficient to show the necessary financial resources for a proposed increase in the authorisation on the licence held by Exeter-based Michael Hazel from one to 14 vehicles has been upheld.
The Tribunal said that on 19 May 2016, Mr Hazell applied to increase the authorisation on his licence. On the same date, Carmel Coaches applied for a 15-vehicle international licence with Anthony Hazell nominated as the Transport Manager.
The TC made it clear that he was concerned that between Mr Hazell, his father Anthony and his sister Carolyn Alderton, there were four separate licences either in existence or being applied for, the sole trader licence of Mr Hazell, CM Coaches, Carmel Coaches and Carmel Coaches Bristol operated by Carolyn Alderton.
Discussions took place about the possibility of all operations being undertaken by Carmel Coaches in the future with the other licences being surrendered.
The TC found that Anthony Hazell’s good repute had been restored and he removed the condition from Mr Hazell’s licence that his father play no part in the business along with a similar condition on the licence of CM Coaches. His determination on the licence applications was that he would be minded to refuse Mr Hazell’s application and grant the Carmel Coaches application.
In relation to Mr Hazell’s application, he said that less than 5% of the additional finance was available from his own means. Lending rates on the credit cards were indicated at around 18% APR. There was nothing in the bank statements that would show that Mr Hazell would have any means to repay the cards should he find it necessary to call upon them.
Dismissing the appeal, the Tribunal said that Traffic Commissioners were rightly sceptical of an operator’s reliance upon undrawn credit card balances, because the high interest rates charged on balances were not compatible or consistent with a viable business model and might place an unacceptable financial burden on the business.
Further, because of those high interest rates, in all likelihood, the higher the dependence on credit cards to show financial standing, the less likely it would be that an operator would in fact use the facilities if required to do so because of the high cost of that borrowing.
To allow an operator to rely on a large credit card facility, without having prudently built up a working reserve which can be relied upon to establish financial standing, places that operator at an unfair advantage over those who have prudently built up their reserves and their operation over time. Large operators should not be relying upon credit card facilities at all.
