CREDIT_VET_REVIEW_Issues_summary_250909 by fanzhongqing


									                                              Consolidated issues for 2009 BTW Credit Vet Review

Issue    CP(s)*           Issue          Document/                           Summary                                    BT initial comments

 No.                     Name/            Clause                              of Issue
 1.     VM,    GC,   General – lack                                                                               Presumably to be picked up in
        CW           of transparency                                                                              discussion   against  individual
 2.     VM,    GC,   General – level                                                                              Presumably to be picked up in
        CW           of BT discretion                                                                             discussion   against  individual
 3.     C&W+         General         -                    Proposals disproportionate to larger [more
                     Proportionality                       established] CPs – need a different process to be
                                                           implemented on an exceptional basis
                                                         Also proportionality is questionable:
                                                         1. Broad view on credit worthiness.
                                                         2. General right for BT to take risk mitigation action
                                                              in relation to:
                                                              - new product and services requirements
                                                              - increase in demand for existing products
                                                                   and services
                                                              - novation
                                                          not just related to payment default. It is
                                                         somewhat unclear whether any of the above
                                                         constitute valid reasons for vetting a customer, i.e.
                                                         do they create a risk over and beyond the normal
                                                         risk of doing business for BT?
                                                        Also question weighing of BT rating v. credit
                                                          agency rating (e.g. D&B) and recommended action.

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CREDIT VET REVIEW Issues summary 250909
 4.    C&W+        General         –               Suggest that Credit Vet activity amounts to “double
                   “double                         dipping” because of the bad debt element included in
                   dipping”                        product pricing
 5.    C&W+        General              2.1.1      Reference to need for safeguards where “there is
                   Principles                      evidence that a risk of fault exists” is too broad.
                                                   Inconsistent with triggers approach under paragraph 3
 6.    VM/C&W+     Objectivity     of   3.2        Need for more objectivity in the credit vetting triggers
                   triggers       for              particularly in respect of existing customers. (C&W+ -
                   credit vet                      should be based on two incidents per period, as under
                                                   the SIA, rather than one)
                                                   Quarterly credit vets without cause is not reasonable.
 7.    VM          Objectivity     of   3.2.3      The credit vet should be triggered by evidence that a
                   triggers       for              customer’s credit limit is likely to be exceeded rather
                   credit vet                      than according to BTW’s judgement.
 8.    C&W+        Objectivity     of   3.2.4      Disagree with trigger of non-payment of undisputed
                   triggers       for              amount for seven days [under the SIA, two events
                   credit vet                      trigger monitoring and two trigger a credit vet]
 9.    VM          Objectivity     of   3.2.6      This clause should be deleted, the credit vet should not
                   triggers       for              be at BTW’s discretion but trigged according to an
                   credit vet                      objective set of criteria.
 10.   VM          Notification   of    4          Customers should be notified in advance of the credit
                   credit vet                      vet being carried out, in particular to enable additional
                                                   information to be supplied in accordance with clause
                                                   VM would like to see the inclusion of a clear process for
                                                   requesting a copy of the credit vet.
 11.   VM/C&W+     Notification   of    4.1.1(b)   The Report should be provided on request not only if
                   credit vet                      BTW chooses to do so. (C&W+ - if grounds for non-
                                                   supply, should be specified transparently)

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CREDIT VET REVIEW Issues summary 250909
 12.   VM          Vetting        of    4.3.2      Directors should only be subject to a credit vet in
                   Company                         extraordinary circumstances; for example if there is
                   Directors                       evidence of a specific credit risk in relation to the

 13.   VM          Internal    credit   4.4.2      VM would like better transparency in the process as a
                   vet                             whole, for example by making the entire internal report
                                                   available to customers rather than simply the executive
 14.   C&W+        Calculation    of    4.6        Challenge     definition    of   “average   debt”   (period,
                   current        or               inclusions)
 15.   VM          Calculation    of    4.6.1(a)   The credit limit should not be based solely on an internal
                   credit limit                    calculation which may not be objective.
 16.   VM/CW       Form            of   4.7.2      Depending on the form of security required, 10 working
                   security                        days is unlikely to be sufficient time.

                                                   C&W+ - query timescales for Security – start, duration,
 17.   VM/C&W+     Form            of   4.7.3      Alternative forms of security should be subject to
                   Security                        agreement (possibly according to a pre-determined set
                                                   of criteria) rather than at BT’s discretion.
                                                   C&W+ - BT process and timescales need to be better

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CREDIT VET REVIEW Issues summary 250909
 18.   C&W+        Sanctions for      4.7.5   Refusal to supply or suspension until security provided.
                   failure       to
                   provide security           It seems excessive that existing service may be
                                              suspended even when the customer doesn’t represent
                                              an immediate threat. Where is the proportionality in this?
                                              Also the process for refusal to contract or suspend
                                              service must have a (clearly defined) start and end

                                              See also clause 10  unclear and not directly related to
                                              Includes e.g. “The applicant has overdue debts with BT
                                              or a BT Associated entity”

 19.   VM          Disputes    and    5       The disputes process seems to apply only in certain
                   Appeals                    circumstances, for example arrangements for settlement
                   process                    cannot be appealed (9.2). The dispute/ appeals process
                                              should apply in all situations and should always be
                                              referred to an independent body for determination.
 20.   VM          Refund        of   6.1     The period for which BTW can hold deposits from
                   deposits                   customers should be reviewed as the current criteria for
                                              refund is not reasonable.
 21.   C&W+        Refusal       of   10      Unclear how this ties up with the rest of the process.
                                              No linkage with 4.7

                                              Includes: The applicant has overdue debts with BT or a
                                              BT Associated entity
                                                         Any overdue debt? [not proportional]
                                                         What is an Associated entity?

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CREDIT VET REVIEW Issues summary 250909
 22.   C&W+        Monitoring        11               Virtually gives the ability to BT to request a security at
                                                      any time, without linkage to payment default or other

                                                      Paragraph 5.5 does not exist
 23.   VM          -                 -                VM considers that the policy should be 2 way and
                                                      applicable to BT when purchasing products from CPs.

 24.   VM          Confidentiality   -                VM would like to see the inclusion of confidentiality and
                                                      data protection obligations, particularly if BTW is vetting
                                                      company directors individually.
 25.   GC          General           PPC Credit Vet   Suggest that Credit Vet activity unnecessary for PPCs
                                                      (i) nature of the product/customer base
                                                      (ii) provision for default interest rate
                                                      (iii) “double dipping” because of bad debt element in
                                                      product pricing

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CREDIT VET REVIEW Issues summary 250909

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