Golf clubs can now collect membership fees through direct debit AND be FCA compliant
A new automated online system has been launched that allows golf clubs to collect annual dues by direct debit while ensuring the club is FCA compliant.
Many golf clubs would find it difficult to survive without offering their members the option of paying their annual membership in installments.
But these internal programs may be subject to the Consumer Credit Act 1974 (CCA), which would result in additional regulation of clubs by the Financial Conduct Authority (FCA).
Now there is another way.
GolfClubSubs enlisted the advice of leading law firm Morton Fraser to create an automated, paperless online system that has all the benefits of an in-house direct debit system without the burden of costly administration, while ensuring that the club complies with current FCA regulations.
“Many club managers are working harder than ever to stay on top of member payments, database administration and reporting, especially now given club budgets shrinking due to the pandemic,” said Daniel Halliday, Founder and CEO of GolfClubSubs.
He continues, “The GolfClubSubs system allows clubs to run a fully FCA-compliant debit system without the administrative overhead of manually uploading files or over the phone to late payers. It essentially operates on its own, allowing the club manager and the accounting team to focus on higher value-added tasks.
The risks of bringing in a credit provider
For many clubs, additional financial and administrative costs are unthinkable. Yet, if golfers cannot avail of a flexible payment facility, their membership may be lost for the club.
Naturally, this scenario puts the management of the club in a bind. And, in many cases, they have turned to credit providers, but clubs need to be careful: introducing members to such providers is credit brokerage and, as such, is regulated by the FCA. Clubs that choose to go this route remain subject to the regulations they sought to avoid in the first place. What appears to be an attractive option may actually leave a club more exposed to FCA compliance issues.
John Lunn, banking and financial partner at well-known law firm Morton Fraser, sheds some light on the matter: “Some clubs have chosen to introduce members to credit providers rather than collecting the monthly payments themselves. This gives the club the benefit of an upfront annual membership payment with the member repaying the credit provider in monthly installments, including interest and fees.
“For the avoidance of doubt, this will not mean that clubs are exempt from FCA regulations.”
John Lunn adds even more clarity to the clubs position: “Introducing members to credit providers is ‘credit brokerage’. This is a regulated activity that requires the club to be regulated by the FCA with credit brokerage authorizations. “
Complying with FCA regulations isn’t the only additional concern for clubs
Arranging with a credit provider can also expose a club to hidden risks. If a member fails to adhere to a payment plan, which is in effect a loan from the credit provider, the club may be required to repay the outstanding balance to the credit provider.
In the past, clubs have suffered from such flaws, incurring unforeseen liabilities. Alternatively, the member may be required to pay even if their circumstances have changed due to a health problem, for example, and they are no longer able to golf at the club.
A smart solution
Too many golf clubs face an unnecessary dilemma when it comes to collecting annual memberships and staying FCA compliant. A smart software solution, developed by GolfClubSubs and already adopted in clubs in the UK and Ireland, removes this administrative burden. Overnight, your club can reduce its workload and costs.
Rhys Morgan, Managing Director of Pennard Golf Club near Swansea, says, “Pennard has moved to GolfClubSubs to handle our members’ direct debits. The installation process was simple and well managed. We are extremely satisfied with the efficiency of the system.
No more fees for failed payments
GolfClubSubs created the first fully automated direct debit system, removing an expensive and time-consuming layer from the sub-collection process. Members can register from home on their PC or mobile phone and the club collects payment without the need for any manual entry. So there is no need to process checks or deposit cash in the bank. Better yet, no charge to the club in the event of payment failure.
- Automatic reconciliation of payments and reports
- Automatic retry of failed payments and communication to the member to top up their bank account if necessary
- Automatic notifications by SMS and e-mail.
How to structure direct debit systems
Clubs can help avoid CCA and FCA regulation by adopting the criteria set out below:
- No membership fee granted before receipt of payment
- Each installment must be a prepayment for the next month’s green fees – on an ongoing pay-as-you-go basis.
- Inform members that they lose the right to play if they stop paying
- Create a point of difference between monthly payers and full payers – committee seats are only available for full payers, for example
- No separate administration costs.
GolfClubSubs has incorporated this process with specific wording of the conditions provided by John Lunn in their direct debit system. This allows clubs to collect their monthly subscriptions with peace of mind while being on the right side of the regulations in force.
For more details and to take a look at the system, please visit the GolfClubSubs website at: www.golfclubsubs.com or contact Daniel Halliday by email: [email protected]
(Clubs should seek their own specific compliance advice on their own levy systems when in doubt.)