BCA finances

[cap n chris]

Sorry, what's your point?

Pretty sure I responded to this earlier today but it seems to have disappeared.

 

[ChrisB]

Pretty sure I responded to this earlier today but it seems to have disappeared.

I don't remember seeing it. I asked the question because there are two places where I mentioned £80k - the cost of the CRoW legal case and the amount of the Insurance Reserve.

If you were expressing surprise or concern over the CRoW costs, my view it that it's history. The membership voted for it, most if not all the Council members involved are not there now, and it doesn't change how we should respond to the current financial situation. I only mentioned it because it's part of the story of why BCA no longer has spare money, and I need people to understand that.

 

[Badlad]

There is another large cost which is mostly hidden from view. That is the cost of holding large reserves of money during a period of high inflation and low saving rates. From my recollection the BCA held a reserve which averaged about £250,000 over the last ten yeans. During several years that i was involved in BCA the reserve was well over 300k. According to the Bank of England, for £250,000 held in 2014 you would now need £332,000 to have the same buying power. That's another £80K figure to add into the mix.

I don't know what the figure would be once all the factors are taken into account but holding large reserves does have a significant inflationary cost too. BCA tend to be very cautious holding funds in lower/safer interest rate saving accounts. If interest rates do rise above inflation, then happy days for the reserve, but for the last fifteen years this has not been the case.

I make this point to show that spending members money is better than holding it in reserve. I am pleased to see the figure come down and glad that increased spending on the regions, Y&D and trying to legalise access has played a part in that. I suggest it has been a very good use of members money, and one which the majority of members (and council) supported.

Putting rates up £4 a year is hardly going to break anyone's bank is it, or is it?

 

[ChrisB]

I make this point to show that spending members money is better than holding it in reserve

This is well understood. It was the reason membership fees were reduced in 2015, and the previous Treasurer, Howard Jones, wrote an article in the BCA Newsletter in 2020 explaining his policy of spending the accumulated surplus for the benefit of caving.

The point has now been reached where the surplus has been spent and the reserves are now at the level which Council has previously set in policy.
This now requires a reversal of the 2015 cut in fees and a refocus of the mission to spend the surplus.

My proposal to Council is based on my 'best guess' of future expenditure, not a pessimistic estimate. It's therefore possible that a small deficit may continue. The fee proposal is coupled with a review of the policy on reserves, to see if the amount required can reasonably be reduced.

Putting rates up £4 a year is hardly going to break anyone's bank is it

It might be £6 (which won't break the bank either). Council might not accept my recommendation and may think it's sailing too close to the wind. A prudent reserve is important to ensure BCA can continue to function. As an unincorporated Association (not a limited company) the officers and members would be liable for the debts if it became bankrupt, so the reserve must always be enough to ensure that debts can be paid, even if the Association had to be wound up immediately afterwards.

 

[Ian Adams]

. As an unincorporated Association (not a limited company) the officers and members would be liable for the debts if it became bankrupt ...

With regards to "members", do you mean DIMs (Direct Insured Members) only, or CIMs (Club Insured Members) as well?

Ian

 

[ChrisB]

do you mean DIMs (Direct Insured Members) only, or CIMs (Club Insured Members) as well

As I understand it, so far, all the members of any Association could be liable, as an Association isn't a legal entity. So in the case of BCA it would be DIMs, CIMs, and clubs. Whether BCA should remain an Association or become some kind of limited corporate body is something I'm researching.

Incidentally, the 'I' in DIM and and CIM is 'Individual'.

 

[ChrisB]

Whether BCA should remain an Association or become some kind of limited corporate body is something I'm researching.

My priority in the short time I've been in post has been to ensure that the BCA doesn't get to a situation where it can't meet its debts.

 

[Ouan]

As I understand it, so far, all the members of any Association could be liable, as an Association isn't a legal entity. So in the case of BCA it would be DIMs, CIMs, and clubs. Whether BCA should remain an Association or become some kind of limited corporate body is something I'm researching.

At least 4 large clubs are limited corporate bodies to reduce the liability risk to their members. But these club members are then members of an unincorporated national body which, perhaps, has more liability risk than a local club. The clubs have to be members of the national body as the national body has a monopoly on the public liability insurance that grants their members access to some caves. All members of the club have to be CIMs of the national body, including members who live outside the UK and can't be covered by the PL policy. This will start to get a bit messy if anything ever reaches the courts.

 

[ChrisB]

At least 4 large clubs are limited corporate bodies to reduce the liability risk to their members. But these club members are then members of an unincorporated national body which, perhaps, has more liability risk than a local club.

Correct. That's why I'm researching the subject.

The clubs have to be members of the national body as the national body has a monopoly on the public liability insurance that grants their members access to some caves.

The BCA insurance is not a monopoly. Any club that wants to arrange its own PL insurance and not join BCA is free to do so, but they might not like the premium.

I would like to get to the situation where all clubs and individuals join BCA because they believe it's an organisation that deserves support, but I appreciate that we're not there yet.

All members of the club have to be CIMs of the national body, including members who live outside the UK and can't be covered by the PL policy.

I'm not the Insurance Manager, but my understanding is they would be covered while caving in the UK, which might be the reason why they were members of a BCA club. Somebody who doesn't cave in the UK could join as a non-caving CIM.

This will start to get a bit messy if anything ever reaches the courts.

Things usually get messy if they reach the courts, and the aim is to ensure that doesn't happen.

 

[JoshW]

My priority in the short time I've been in post has been to ensure that the BCA doesn't get to a situation where it can't meet its debts.

Probably very early doors. But it’d be interesting to get your thoughts on what the potential BCA debts could be. Our (main) insurance is paid monthly by direct debit (and so could be cancelled immediately). Other than wages (which I assume are paid regularly) I can’t think of any outgoings or debts we might accumulate that even if our bank account emptied we’d need money for.

Possibly the exception being the organisation being sued for an amount greater than 20m, the current limit of cover on the PL policy (not sure what on earth would justify this)

I'm not the Insurance Manager, but my understanding is they would be covered while caving in the UK, which might be the reason why they were members of a BCA club. Somebody who doesn't cave in the UK could join as a non-caving CIM.

It depends on how long they are out of the country for. I think it needs them to be UK relevant people, and so need to spend over 6 months based on the UK in order to be covered.

At least 4 large clubs are limited corporate bodies to reduce the liability risk to their members. But these club members are then members of an unincorporated national body which, perhaps, has more liability risk than a local club

I was never quite sure why clubs went down this route as I wasn’t sure what liabilities they thought there might be to them as a club that weren’t already covered by the PL policy

 

[Ouan]

I was never quite sure why clubs went down this route as I wasn’t sure what liabilities they thought there might be to them as a club that weren’t already covered by the PL policy

[hypothetical scenario] If the insurers find a small print exclusion clause and refuse the claim (after all, they are an insurance company), or a club/association offical was negligent which invalidates the PL policy, then theoretically all members of the unincorporated club/association can be sued. As a sister organisation found out this could be in the order of £12 million, or c.£1,600 per BCA member. Lawyers will, of course, go after the richest members as they know it's pointless suing a student. As a member of an incorporated body all that you risk losing is your share in that body, or about 5p.
And it isn't only public liability. Imagine another scenario where the unincorporated national body took on a legal case, lost and costs, fees and penalties were awarded against the national body. If these costs couldn't be met from reserves all members would be equally liable for the debt.

 

[Bob Mehew]

I'm quite concerned that BCA feels it has to prepare to continue providing a service to cavers should it be denied banking services!!

What is the committee doing that makes this a possibility and how will it manage without banking facilities?

I think this arose from the following alert I picked up.

My wife received a message through her membership of the English Folk Dance and Song Society which gave her a link to a Morris Men organisation . Simply put, it seems that the regulations made in 2017 require clubs to register their existence to provide information relating to potential money laundering activities (presumably to rule them out). Having perused the regs (not all 200 plus pages) I thought that this may not be applicable to clubs without properties. So I went back to the Morris Federation whose response makes it clear that the advice was based on legal advice so yes it did!

ChrisB has been informed and has it on his list of things to look into. I did offer to support him on this one.

No doubt there are other risks lurking which BCA should be considering taking action on. Absence of membership of certain national bodies has not helped BCA to keep abreast of such developments.

 

[Bob Mehew]

[hypothetical scenario] If the insurers find a small print exclusion clause and refuse the claim (after all, they are an insurance company), or a club/association offical was negligent which invalidates the PL policy, then theoretically all members of the unincorporated club/association can be sued. As a sister organisation found out this could be in the order of £12 million, or c.£1,600 per BCA member. Lawyers will, of course, go after the richest members as they know it's pointless suing a student. As a member of an incorporated body all that you risk losing is your share in that body, or about 5p.
And it isn't only public liability. Imagine another scenario where the unincorporated national body took on a legal case, lost and costs, fees and penalties were awarded against the national body. If these costs couldn't be met from reserves all members would be equally liable for the debt.

It is worth bearing mind that even having gone incorporated, that does not stop the claimant suing the rich members in the club, if they can demonstrate some form of link between the event and that member. It happened to one caving club long ago though fortunately (if that is the correct term?) the claim was settled out of court so we have no details. So it is worth having the individual insurance cover.

 

[JoshW]

or a club/association offical was negligent which invalidates the PL policy

Be interested to know where you got this information from?

 

[Ouan]

Be interested to know where you got this information from?

Sorry, I should have said gross negligence. Or a criminal or fraudulant act. I will be very surprised if the BCA PL (or officers and directors) insurance covers these. Although the responsibility for such a grossly negligent, criminal or fraudulent act falls on the individual who carries it out, I can't help suspecting that a no-win, no-fee law firm will go after any member they can find if the guilty official can't pay up.

To be clear I'm not saying PL insurance is a waste of time, it is essential. But becoming incorporated is a cheap second line of defence.

 

[ChrisB]

ChrisB has been informed and has it on his list of things to look into. I did offer to support him on this one.

Thanks Bob, I do, and you did.

No doubt there are other risks lurking which BCA should be considering taking action on.

Hence my proposal for a risk assessment

Absence of membership of certain national bodies has not helped BCA to keep abreast of such developments.

Yes, I know which ones you mean and intend to propose that BCA take up membership again.

 

[ChrisB]

I'm not likely to respond to any further posts on this thread until Sunday evening - I'm going caving...

 

[Badlad]

Interesting discussion but, I think you all need to step back a little

 

[Badlad]

The perception of these risks is getting extreme. It is verging on scare-mongering. If officers and members are as liable as you suggest then who on earth would want to volunteer for an organisation or be a member of it.

I recall a few years ago when a certain individual, supposedly well versed in legal and liability matters, came to a CNCC meeting. He spouted the same line that officers of the association could be held personably liable for their actions, even suggesting that officers could lose their homes and all they owned if things went wrong. Some key officers seriously considered resigning as a result until they were persuaded by more level headed arguments that the risk was almost imperceptive.

When looking into action on risk, you do have to keep an anchor grounded in the real world. No disrespect.

 

[andrewmcleod]

I was never quite sure why clubs went down this route as I wasn’t sure what liabilities they thought there might be to them as a club that weren’t already covered by the PL policy

For the clubs that I know that have become mutuals (limited by share I think?), the risks were a) running a public winch meet or b) contaminated land remediation from historic mining (albeit highly unlikely to be required). Would the BCA policy cover these?