Retailers with insurance win access to unsecured credit

Retailers with appropriate Trade Credit Insurance (TCI) in place will be able to access an Unsecured Credit Allowance (UCA) from tomorrow (31 July) after Ofwat accepted a Code Panel recommendation on alternative eligible credit support.

The Water Retail Company proposed the change, arguing that the forms of credit support currently prescribed in the Codes are not commercially viable for retailers who do not have a credit history or access to a Parent Company Guarantee. Ofwat noted: “It has been suggested that this is a material issue which discourages or potentially prevents small retailers from entering the market. If a new entrant is unable to gain access to UCA then the combination of Eligible Credit Support options and/or Alternative Eligible Credit options would need to be relied upon.”

TCI usually covers a portfolio of customers and in the event of non-payment by those customers (due to specified reasons) the policy pays out an agreed percentage of the unpaid amount. CPW019 means that where a retailer provides evidence of a TCI policy which adheres to the specified terms, it will now be able to gain access to UCA of a specified percentage.