Face the facts UK Farm Finance – the acorn apparently never grows
In an article not so long ago we suggested, indeed insisted, that we were not connected with the UK Group or UK Farm Finance.
It was hardly surprising that some of our customers were asking whether we were, having come across UK Farm Finance or heard of them. Some of them were trying to get out of loans arranged by the UK Acorn Group; many were beyond help. Some of these were old customers of ours who we had actually arranged longer-term land loans for previously; loans for land which had either been replaced by bridging loans, arranged by UK Acorn, or where a bridging loan had been lent behind another loan that had been used to repay the (often cheaper) farm finance we had arranged.
In every case we came across, the customers told us that they believed the short-term bridging loan would be replaced with long-term farm loans. They were convinced by a sales patter that led them to believe that Desmond Phillips or Des Phillips (who an MP described on BBC Radio 4’s Face the Facts programme as being at the centre of the web) would find replacement finance for them. In one of our notable case studies www.farmandcountryfinance.co.uk/case_studies.html#3 we explained that our customers had received a visit from our Somerset based ‘competitors‘ before us – they too told us that they had been promised replacement finance (despite the fact that UK’s paperwork does not mention it) and that they were wary. One look at the numbers told us that replacement finance could never be available and this was a question of the customers realising a substantial gain, which could only be achieved by buying and selling as quickly as possible; this is what we told them, was reflected in our paperwork and is precisely what happened.
Having listened to Face the Facts on BBC Radio 4 today, it did not actually tell us much more than we already knew about Des Phillips’s MO. We already knew that he appeared to be the ‘farmer’s friend’. We knew about Connaught and the Connaught Fund and we knew his group had borrowed from Barclays. We listened to the Connaught investor who could not understand why all the loans Phillips’s Group had made were technically in default and we marvelled at the apparent lack of due diligence from Connaught about Des Phillips’s background – his two personal bankruptcies, his failed businesses, his conviction for theft and more latterly his individual voluntary arrangement. We should stress that we have never met Des or ever had any dealings with his Group and nor have we ever aspired to – we made our minds up years ago; there were just too many stories, comments and complaints.
We listened to UK’s statement to the programme that said, amongst other things, that some of the business plans put forward by farmers had failed and that they were legally advised before commitment, although the question to be asked is which firm of solicitors actually provided that advice. Moreover, what business plan is expected to come to fruition during a loan term of, say, six months?
We can explain why all UK’s loans were technically in default, even though the interest was deducted and paid in advance, along with a whole host of other costs. The answer lies in the shortness of the term for it is likely that most loans will have been pitched at six months, which goes by in the bat of an eyelid and was unlikely to be sufficient time for any borrower to achieve replacement finance. The end result was technical default as soon as the loan went beyond its initial term, for the loan agreement would have specified that the loan would have to be repaid by the end of month six or whatever very short-term was given. It is not known just how many actually were able to repay within six months, but if a letter from Connaught was sent to investors suggesting all loans were in technical default, it might be reasonable to make a presumption. It seems unlikely to us that borrowers would have continued to service the interest, after the initial term, leading not only to a spiralling debt but also a lack of cash inflow to UK Acorn and an inability by them to then pay investors any interest. Investors that apparently include Scottish Widows.
We are aware of cases where customers came to us before UK and were told that what they were trying to do was not feasible and not something we would want to assist with – a number of them came back, having tasted the UK Group offerings of ‘opportunity finance’ and bitterly regretted it. Some of them were facing huge losses and possession and some still are. We would never say that we told them so. There is no doubt that our honesty and integrity lost us an income which Phillips was able to benefit from, for the difference which makes the difference is that, for all the patter and pleasantries, we all have the choice to be treated as human beings that matter, or as commodities. We are just pointing out that we prefer to play a straight bat – we have the utmost empathy for anyone who finds themselves in the dire position of having a bridging loan with the UK Group but cannot wave a magic wand.
Perhaps the moral in the story is that one bad apple does not make the whole barrel bad and we have no doubt that short-term finance has a place in the market just as long as customers are fully apprised of the terms, their obligations and are independently advised. At the present time, most of the short-term farm finance we arrange is over three years. As a company, we do not believe we have ever arranged a bridging loan of six months. What does this tell you?
If you have a look round our site, look at our credentials, our case studies and our testimonials there is not a lot more we can say.