Operator’s Licence: Changes in Financial Resources

Possible changes in the amount of financial resources needed by Restricted Licence goods and passenger operators have been announced by the Office of the Traffic Commissioner.

Operators of goods vehicles with a gross weighted plate of more than 3.5 tonnes and public service vehicles used commercially need an Operator’s Licence. Applicants and holders of Licences have to meet certain requirements including one relating to financial standing or resources. The purpose of this is to demonstrate financial stability so that there can be proper arrangements to ensure there are fit and serviceable vehicles. How finance is demonstrated is achieved in various ways. If is an ongoing requirement throughout the lifetime of the Licence. If not satisfied it cannot remain in force – and vehicles cannot lawfully be operated without this authority.

Operator’s Licences are either Standard (National or International) Licences or Restricted Licences.

The possible change here relates to Restricted Licences. These permit goods vehicles to be used commercially but not for hire or reward i.e. not carrying goods for a third party. A Restricted PSV licence authorises use of a maximum two public service vehicles not adapted to carry more than eight passengers (or 16 in some circumstances).

Standard Licence applicants and holders have to fulfil the financial standing requirements set out in EC Regulation No. 1071/2009. This is fixed annually every October through a valuation of the Euro against Sterling. The rates in effect from 1 January 2018 were £7,950 for the first vehicle and £4,400 for the second and each additional vehicle.

However, the financial resources required for a Restricted Licence are fixed by Traffic Commissioners and are much lower. They are currently £3,100 for the first vehicle and £1,700 for each additional vehicle. There is therefore a significant difference between the amounts required for a Standard and for a Restricted Licence holder. The latter is also not required to fulfil the requirement to have a qualified internal or external nominated transport manager.

The Office of the Traffic Commissioner is now reviewing the financial standing amounts for a Restricted Licence that have not changed since 2004. They are considering whether to make any change at all or if any change is to be made what this should be. An inflationary increase based on the Consumer Price Index (CPI) since 2004 or the CPI since 2013 would raise the amount required by 37% or 7.4% respectively. If Restricted Licences were standardised with Standard Licences this would be a hefty 156% increase.

Traffic Commissioner also want to hear what impact there would be on businesses were there to be any increase in the level of financial resources. Further, they seek views on the establishing of five-year review periods at which point the financial resource level required would be reconsidered.

The consultation relating to this opened on 11 June and runs until 31 August 2018.

For more information about this topic, please get in touch with Tim Ridyard of our Road Transport team.