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Banking & Finance
Overview
Lending money and taking effective security is at the heart of most commercial transactions both large and small. The amount of commercial lending is on the increase every year and the banking industry has a lot to be optimistic about. However, it is a very competitive industry and lenders are striving to make their products as attractive as possible. We work alongside our clients to help them achieve their aims. We do this by being highly skilled, efficient and flexible in our approach.
Lending patterns are constantly changing. At one end of the scale, the government’s continued commitment to the private finance initiative means that this type of transaction will continue to arise whilst at the other, a move away from overdraft to other forms of working capital funding leads to an increase in invoice finance or equipment finance.
Changes in the law
Some of the developments in this sector are driven by changes in the law such as those introduced by the Enterprise Act 2002. This has seen a move towards more of a rescue culture with administration becoming the preferred insolvency procedure rather than receivership. We have been able to guide our clients through these changes and the implications for them.
The Scottish Parliament has made Scottish legislation which will have far reaching consequences in this sector. The Bankruptcy and Diligence etc. Scotland Act 2007 has been passed and, when brought into force, will introduce sweeping changes in relation to the registration and ranking of floating charges. When combined with the changes in the Companies Act 2006, we can hope to have a more transparent system for the registration of charges.
Other changes are driven in response to events such as the collapse of Parmalat and Enron, which has resulted in increased attention on the duties of directors. The Companies (Audit, Investigations and Community Enterprise) Act 2004, which came into force in April 2005 gave increased powers to auditors to obtain information and should result in there being greater confidence in companies accounts.
Multi-jurisdictional transactions
There are also an increasing number of transactions involving the laws of more than one country, where borrowers based in Scotland have assets abroad or, concerning borrowers with assets in Scotland borrowing money elsewhere. Scotland has a separate legal system from the rest of the United Kingdom, and with its own parliament making new Scottish legislation, it is even more important to remain aware of differences in Scots law from the rest of the UK. We have advised lenders and other solicitors on the impact of Scots law on transactions and our network of contacts in legal firms overseas allows us to assist clients with transactions which have a multi-jurisdictional aspect.
Consumer Credit Regulations
In other parts of the banking sector, we are seeing a major revision of consumer credit regulations. These came into force in May 2005. There is also legislation seeking to limit interest rates currently working its way through Parliament. The need for authoritative legal advice has never been greater.
Pensions
The continuing turmoil in the pensions sector will also impact on lenders who are concerned with the funding commitments of borrowers. This is an area in which Biggart Baillie has considerable expertise and which we expect to see as a growing concern to lenders over the next few years.
The law is constantly changing but this can also bring opportunities. We are constantly striving to help our clients to seek positive business outcomes from legal developments.
Contacts for Banking & Finance