UK non-recourse invoice finance hoping for GDPR exemption


The invoice finance arm of UK Finance held its annual Invoice Finance & Asset Based Lending Conference in Leeds last week. The Professional Standards Counsel headed by Lucy Armstrong, spoke about the importance of making clients aware that back-office services are sometimes outsourced following some concerns raised by clients and that perhaps the industry needs to be more up front about this.  The Counsel is also expected to look closely at the Carillion collapse and what the invoice finance sector can do in terms of addressing cultural issues and the influence that it can have on supply chains, transparency and simplicity of contracts.                                                                                                                                    

Jeff Longhurst, UK Finance Managing Director, Membership, Events and Training reported on the results of UK Finance discussions with the UK’s Information Commissioners Office with regard to GDPR and its effect on non-disclosed invoice finance arrangements and the collection of information on debtors without their permission. Mr Longhurst said that it was not clear if the invoice finance sector can rely on Article 14.5 to provide exemption to invoice finance providers.

Article 14 is in respect of “information to be provided where personal data have not been obtained from the data subject”. Article 14.5 provides exemptions in that it states “the provision of such information proves impossible or would involve a disproportionate effort, in particular for processing for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes, subject to the conditions and safeguards referred to in Article 89(1) or in so far as the obligation referred to in paragraph 1 of this Article is likely to render impossible or seriously impair the achievement of the objectives of that processing.”

Whether or not Article 14.5 is an exemption for the invoice finance sector is not clear and the formal advice is being sought from UK Finance counsel on this matter.

It was also mentioned that digital disruption is raising the expectations of clients and potential clients and that there may be opportunities not only for development but also partnering with the disruptors. Invoice finance clients are increasingly looking for ease of use, simplicity and less onerous arrangements much of which disrupters are attempting to offer.

Perry Burns, Chairman of the Risk Exchange Forum spoke about the use of technology and social media in combatting fraud and sharing intelligence. For example, social media alerts can be used to make invoice financiers aware of multiple frauds. He also highlighted the many uses that google has in terms of verifying the authenticity of client invoices and identities.