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The Dangers of Unregistered Businesses 22 March 2012

On the 2nd December 2011 the Department of Economic Development’s Companies Registry issued a media release encouraging businesses that had not previously registered to do so.

The Companies Registry identified around 400 businesses advertising on the Isle of Man which had not been registered and contacted them via letter, enclosing copies of practice notes and registration forms. The Registry advised them of a requirement under legislation in the Isle of Man which requires that any individual, firm or company that conducts business or trading activity under a name other than its own must be registered.

Around 70% of new business registrations received since the commencement of this exercise have been made after being identified by the Companies Registry.

As a follow up to this exercise the Companies Registry together with the Isle of Man Office of Fair Trading (OFT) are requesting that consumers in the Isle of Man check that a business is registered with the Companies Registry prior to undertaking any business dealings after seeing an advertisement.

Both the Companies Registry and the Isle of Man Office of Fair Trading share the same goal in wanting to see all legitimate businesses registered to provide the consumer with information as to who is behind the business and to limit the scope on the Isle of Man for so called ‘rogue traders’.

The Companies Registry has a search facility available on its website www.companiesregistry.gov.im, queries can be made via email to companies@gov.im or by telephone on 689389. There is also a company search facility available within the office of the Companies Registry in St George’s Court (Hill Street Entrance), Upper Church Street, Douglas.

Commenting on the review, Alan Crowe MLC, Political Member for the Isle of Man Department of Economic Development’s Companies Registry, said:

"The Companies Registry is probably one of the oldest operations within Government and one that has a relatively low profile outside of the business community. However, the information held by the Companies Registry is there to assist not only members of the business community involved in international trade and commerce, but residents looking for a local trader or a business offering a service. Registering a business name not only helps to protect the particular company, it is a public statement of the company’s existence and the service it offers."

Mr Crowe went on to say:

"The information held by the Companies Registry is principally for statutory purposes and does not relate to the knowledge, expertise or competence of the trader or business named, (other checks on their quality of service would need to be made). However, it does provide some assurance that customers and clients are dealing with a resident business and how they can be contacted."

The Isle of Man Office of Fair Trading is backing action being taken by the Department of Economic Development’s Companies Registry to encourage businesses that have not previously registered to do so.

Consumers who are unfortunate enough to do business with rogue traders often don’t know who they have dealt with as they generally demand payment in cash, rarely give receipts and typically advertise using ‘pay as you go’ mobile phone numbers which they frequently change to avoid contact. Where rogue traders do issue paperwork, the business name given is often not registered and the business address given is often false.

Many business proprietors do not realise that it is a criminal offence to fail to comply with the requirements of the Registration of Business Names Acts, 1918 and 1954, with offenders liable to a fine of up to £5,000 per offence on conviction. The OFT considers this to be an important consumer protection measure whilst at the same time acknowledging the protection that compliance affords genuine businesses.

David Quirk MHK, the Chairman of the OFT, said:

"I would urge consumers to only deal with businesses that are registered in accordance with the law. Rogue traders are afraid of being traced which is why they often do not register. The Office of Fair Trading supports the steps being taken by the Companies Registry to encourage compliance. Consumers should check that businesses are properly registered before they do business with them even if their adverts appear in the local newspapers or the local telephone directory. Taking the time to check with Companies Registry may stop them falling prey to a rogue trader."
"Many of the complaints received by the OFT concerning home improvements arise from work done by rogue traders who have no real presence here and have not registered in accordance with the law. This is not a coincidence."

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