DIY retailer Focus is urging the government to sort out the “inflexible and potentially harmful” approach of credit insurers who are reducing or withdrawing cover.
In a statement, the £450m turnover retailer said it is urging business secretary Peter Mandelson to engage with major banks and credit insurance companies to determine why they were adopting such an approach.
It said credit insurance companies’ withdrawal of cover at a moment’s notice put viable businesses at risk and could exacerbate the problems on the high street by “forcing suppliers and retailers alike into a corner”.
Its complaint comes amid reports that less than 5% of Focus stock is now covered by credit insurance.
“If left unchecked, the very problem that credit insurance seeks to avoid (ie preventing suppliers losing out as retailers enter administration) will actually become the inevitable conclusion of an action that stifles a retailer’s ability to get product on its shelves,” said Focus.
“At present, we at Focus, are not encountering any problems with our suppliers as they know that, as a business, Focus is well positioned to weather the worst of the recession.
“We have actively worked with our suppliers to manage through the problems and have a productive and open relationship.
Focus has opened five new stores since June 2008 and rolled out a new format with an updated product range. It says the ongoing support of its suppliers has been a critical part of its success.
