The Approved Contractor Scheme is favouring larger security companies

SIR – I read Bobby Logue’s article on the Security Industry Authority’s (SIA) Approved Contractor Scheme (ACS) with much interest (‘ACS: Mark of distinction’, SMT, August 2005, pp32-35). On reaching page 34 and glancing over the proposed fee structure table for the scheme, I was shocked to discover how the costs are geared towards the larger security companies and seemingly penalise their less ubiquitous counterparts.

If your company turnover is £2 million per annum, the application fee for the ACS is 0.1 of 1% of turnover. If, on the other hand, your annual turnover is £200 million, the application fee works out at 0.00001 of 1%. This clearly discriminates against the smaller contractor.

In proportional terms, those £200 million turnover firms will have a larger turnover of staff. Assuming that they pay each of their officers £25,000 per annum, and that their cost of labour is 65%, they will employ an average of 5,000 officers. If you relate the application fee to a staff turnover of 10% (ie 500 officers per year) then the cost of placing an officer on site while waiting for a licence equates to £4.00 per person. Using the same logic, the smaller organisation will pay £400 per officer.

Looking at the structure for the annual fee, the first option also discriminates in exactly the same way against those companies with a turnover of less than £4 million.

If you want to sell raffle tickets, there is a Gaming Law that says if a ticket costs 50 pence, you cannot sell those tickets in batches of five for £1.00 as this actively discriminates against those who cannot afford to spend £1.00. Does this same law not apply to the SIA?

With regard to the whole cost of licensing and the ACS, if you take into account the fact that the industry is operating on net margins of between 2% and 3.5%, companies with a turnover of around £2 million per annum would have the majority – if not all – of their profits wiped out in the initial 12 months of regulation. That leaves very little scope for improving the business, increasing training or offering pay increases to loyal employees.

If we look ahead to the future, within a period of 12 to 18 months most of the officers within the industry will have been licensed, and will change employers within the sector. The numbers of ‘new’ employees will be minimal and, as a result, the ACS will become a very much more expensive commodity.

There is also mention within Bobby’s article that there will need to be an inspection of all those companies wanting to join the ACS.

At Sector Security Services, we already subject ourselves to two inspections each year. These are conducted by the National Security Inspectorate (NSI), and we pay for the privilege. Any companies already inspected and approved by the NSI will appreciate how rigorous and time consuming this process is.

Is the SIA suggesting that it wants yet more inspections to be carried out, taking up more time and costing more money? Or can the Regulator not use the existing services of the NSI, thereby removing the need for yet another fee to be paid?

We welcome regulation of the industry, the main aim of which is to remove the criminal element while improving the quality of security management, training and personnel. Sector – and many other like-minded companies – already works towards such goals.

Ultimately, the SIA’s objective should be to regulate and license the security industry. The organisation’s work should not become a license to print money for the Government.

Thank you very much for writing to Security Management Today, Margaret.

SMT’s readers should be aware that an extensive SIA consultation phase on ‘the way forward’ for the ACS has just begun. This Regulatory Impact Assessment will take 12 weeks to complete. Anyone with an interest in the matter should make sure they read the document and offer their comments to the SIA.

Take a look on the organisation’s web site (www.the-sia.org.uk) for details.

With regards to your Letter To The Editor, Margaret, the ACS Team at the SIA comments: “There are some fundamental misunderstandings here. One is a misreading of the fee structure options table. A £200 million turnover guarding company would pay around £203,000 per annum, not £2,000. The other is that there will be no duplication of existing inspections