The LAS were asked to assist the production and research team in the making of this programme. 'Reading , Writing and Rip-Offs’ shown on BBC on 24th Sept,2012. The principles of over-pricing and gross misrepresentation is clear but specific cases were not featured due to legal reasons.
Did you watch TV last night?
What did you think of the Panorama programme last night? We thought it was fairer to the leasing industry than anticipated, leaving us with a “moral responsibility” and a practical problem, rather than something more serious. Thankfully, Panorama differentiated between the computer supply companies who were selling massively over-priced equipment to schools, and the leasing companies who’d refinanced them unwittingly. The rogue computer supply companies siphoned off the refinance proceeds before going into administration, leaving surprised schools in substantial contracts directly with leasing companies. Some of the directors and owners of these supply companies were caught on camera, no surprises there, rogues all look similar, “geezers” with fast cars, fat tummies, and Pinocchio noses. Stephen Sklaroff, director general of the FLA, was asked, “What kind of checks would a member make when presented with one of these huge lease proposals?”
His answer: “Typically, members would check with the school that it was happy with the price and suitability of the equipment, and the terms of the deal”And what about value for money? “Value for money is something the school has to take account of before they accept the deal.”
Worryingly, overpriced photocopiers have surfaced again, an area that the FLA thought it had wrapped up in a self-regulating Code of Conduct long ago, and lessors should already be sensitive to the pitfalls with this equipment class.The UK leasing industry was braced for Panorama’s investigative programme into the darker side of the leasing industry, in “Reading, Writing and Rip-offs,” BBC One, Monday, 24 September at 20:30 BST, and then available in the UK on BBC iPlayer. Leasing executives were prepared for an unfair hosing down. It’s not a new story, it covers the same ground as Adrian Goldberg’s radio expose at the start of 2012, but being television, it’s far more graphic, and far more widely viewed. The BBC website has already started to trailer the Panorama programme with excerpts, including a schoolboy image of a slick leasing salesman with a cigar (see screen grab) or CLICK HERE to view excerpt. The programme said that at least 169 schools across the UK have fallen victim to a rip-off that has seen them massively overcharged for IT equipment and left with debts of up to £1.9 million. More than 70,000 students are affected. The UK schools leasing market is thought to total some £300 million.
It says some schools have been left on the verge of closure as a result of cutbacks required to meet the payments. While some schools fell victim to mis-selling companies, others just paid grossly inflated prices for their equipment leases. Paul Kenyon from the BBC’s Panorama programme met with a school IT leasing expert to get a sense of what some of the technology that schools have bought, ranging from photocopiers to computers to printers, should actually have cost. In some cases schools were massively overcharged for substandard equipment. Some schools signed deals that saw them paying as much as 10 times the going rates for computers and photocopiers.
Margaret Hodge MP, chair of the Commons Public Accounts Committee, said that while banks and other financing companies might not be legally required to examine whether the deals offered value for the public money being spent by the schools, she felt there was a “moral responsibility. I think if I was sitting in a major bank knowing that these supply companies were fleecing our schools, I would accept my moral imperative to intervene on behalf of the education sector,” she said.
Specific examples given include: Katesgrove School, Reading: Deal for 330 laptops, 100 never arrived. Left owing £1 million. St Joseph's Catholic School, Slough: Debt of £1.4m and was almost forced to close. Gloucester Primary, south London: Laptops should have cost £650 but over the lease period the cost rose to £4,000 each. Total leasing costs - £1.9 million.
Under the glare of the spotlight, Clydesdale bank agreed to write off millions of pounds in debts owed by 27 schools that fell victim to a large-scale equipment leasing rip-off, though there remains the human misery fall out of at least 10 head teachers who have been suspended or have resigned after being duped by mis-selling companies.A spokesman for Clydesdale Bank said that it had no involvement in selecting the suppliers, or the equipment prices agreed by the schools, but was taking a sympathetic view of the situation.
The bank, which called in the police to investigate the actions of both LTM and DTS (the IT supply companies whose bankrupcies had revealed the hidden liabilities) said, “As a gesture of goodwill, we will be writing to all 27 schools that financed their equipment with us to provide them with reassurance that the bank will support them by writing off the outstanding principal debt associated with these agreements.
“Those schools will also be able to retain the equipment. We hope this will provide the schools and their communities with a great deal of comfort.”In fact, it is rumoured that most of the banks who have found themselves involved with the refinancing of mis-sold deals have quietly been forgiving the debts.
It is a sad fact that many state bodies and organs end up on the wrong end of a bad deal, from multi-billion NHS software contracts that don’t deliver, right down to the minutiae of over-priced window cleaning contracts and dodgy roof repairs. Our industry has inevitably brushed against some of the dirt, and now carries the mark for all to see. To my mind, it is the perfect opportunity to go in and put every one of the deals to rights, institute a Good Leasing Value kitemark, and hopefully lease twice as much to schools next year, by giving schools the security of knowing they are getting into a good and safe transaction. And the heartening news is that the FLA is said to be working on making this happen.