For electronic communication networks, such as broadband providers, becoming a Code Powers Operator gives rights that allow them to carry out and maintain vital apparatus, without having to obtain licences and permissions for each piece of work being carried out. The ‘Code Rights’ are part of the Electronic Communications Code which is set out in schedule 3A of the Communications Act 2003. Code Powers Operator status can only be awarded by Ofcom, or the Secretory of State if based in Scotland.
Obligations under the Electronic Communications Code
As part of their obligations under the Electronic Communications Code, Code Powers Operators must ensure that sufficient funds are made available to meet any costs or expenses that may be incurred by a highways authority, or similar entity, when removing any redundant equipment or putting right any damage caused by the Code Powers Operator upon installation, upkeep or removal of their equipment. This requirement, to set funds aside for future costs, is known as Specified Liabilities. These Specified Liabilities will apply within a pre-determined time frame based on what works are to be carried out. The Code Powers Operators are themselves responsible for the assessment of the amount of Specified Liabilities that they will be required to set aside for each piece of relevant activity they undertake.
So how can Code Powers Operators meet their requirement for Specified Liabilities?
In short, there are a few different ways Specified Liabilities can be provided and Ofcom’s advice on this matter is to seek independent legal advice. An example of one commonly used method of securing Specified Liabilities is by obtaining a performance bond. This will be issued by a financial institution, such as a bank, stating that they have been instructed by the Code Powers Operator to make payment on any relevant written demand from an appropriate authority, such as the highways agency. These can often be costly and most financial institutions will take credit scores and credit history into consideration when a performance bond is requested. On top of this, Code Powers Operators will often be required to gradually increase the sums needed to meet their Specified Liabilities as their business and network grows. This can lead to further or reoccurring costs to alter the performance bond or increase the amount of performance bonds they hold.
Escrow more effective Solution to holding Specified Liabilities
In place of a performance bond, escrow services can be considered as a more cost effective and flexible solution to holding Specified Liabilities. The escrow provider will be able to hold the funds required for the Code Powers Operators’ Specified Liability in their escrow account on their behalf, which enables the necessary requirements to be met.
The escrow provider will put in place an agreement between themselves and the Code Powers Operator to govern how the funds will be held and how the funds will be released. This agreement will allow for the relevant authorities to request payment if needed and be paid directly from the escrow account. By having the agreement set up in this way, it provides a more time efficient service to both the Code Powers Operator and the relevant authorities.
An escrow service provider will also be able to accept further funds into the escrow account as the Code Powers Operators’ needs grow, without having to reassess details or carry out further checks on each increase. There is understandably an increase in fees as more funds are deposited with the escrow provider, which are normally agreed upon engaging the escrow provider, this allows the Code Powers Operator to plan accordingly when assessing the amount of secured liability to be placed in escrow, as their projects grow.
Escrow providers will also carry out necessary Anti-Money Laundering checks when their services are engaged but will only carry out ‘soft checks’; eliminating the need to take credit scores or lending history into consideration.
Choosing to use escrow services will offer a faster and more flexible solution to providing specified liabilities, with the escrow services provided growing with the business needs of the Code Powers Operator.
About Us
Riverside Escrow is a UK based FCA authorised escrow company helping businesses and individuals exchange assets and funds.
We were first set up in 2014 and we offer high quality and cost effective Escrow Services in a board range of transactions. Our dedicated team of staff strives to provide efficient and clear services, tailored to fit each individual transaction.
Riverside Escrow Limited is authorised by the Financial Conduct Authority as a Payment Institution under the Payment Services Regulations 2017 with registration number 920922 for the provision of payment services.
Please note that our authorisation with the Financial Conduct Authority (“FCA”) applies only in relation to payment services transactions (principally transactions involving the holding and payment of funds), it does not relate to any other form of escrow service offered by us – for example where we hold real property.
This means that the Financial Conduct Authority does not regulate us in respect of any escrow transactions other than payment services transactions.
As a result:
– we are not required to comply with the FCA rules in respect of services other than payment services
– the FCA does not regulate us in respect of any escrow services other than payment services
– payment services are the only type of service offered by us that users of our services are able to complain to the FCA about
– payment services are the only type of service offered by us that users of our services are able to complain to the Financial Ombudsman Services about.