COULD measures designed to curb the activities of payday lenders harm the Own Art scheme run by art galleries?

Ann Petherick, a founder member of Own Art in Yorkshire, is worried that the threat of increased fees for participating galleries could lead her to close Kentmere House in Scarcroft Hill, York, after 23 years.

Under the Art Council scheme, a buyer of an artwork can spread the payment over ten months with no interest, no deposit and no charges.

“Own Art benefits everyone – buyers, artists and galleries,” says Ann. “Many galleries already operate on a shoestring, and I understand that many are so worried by the threat of increased fees and the absence of firm information that some have already withdrawn from the scheme.

“Others have said they could not continue in business without it, all of which undermines the opportunities for artists to sell their work. My experience is that many customers have been introduced to buying original art by this scheme and many of those are in low-paid employment.”

Initially, as a condition of membership, every gallery had to take out a consumer credit licence costing £50, valid for five years. In 2010, Ann’s licence renewal rose to £480.

“My view at the time was that I could not afford it, but neither could I afford not to pay it as Own Art is very important to me,” she says. “There was no mention on the licence of any further payments being demanded. Had that been the case, I would not have paid that greatly increased amount.”

In July 2012, the Financial Conduct Authority took over from the Office of Fair Trading and instructed that all licences would cease to be valid on March 31.

“We were told that we must reapply and make an ‘interim payment’ of £150 before that date,” says Ann. “However, the FCA was unable to give any information as to the amount, timing or frequency of future payments and still has not done so. We’re being expected to operate in the dark.”

Ann is aware of vague talk of possible rebates to OFT licence holders, but says: “My understanding is that when an organisation which has entered into contracts ceases to operate, its assets, liabilities, etc, transfer to the new body. The OFT licence constitutes a contract between the OFT and the gallery owner, which is not being honoured.”

The galleries are not lending money but acting as agents, she points out.

“We not only make no profit from the scheme but also run it at a loss, and the charges threatened are out of all proportion to the scale of business and the risk involved,” says Ann.

“Many galleries are very small businesses indeed and both the possible amounts and the uncertainty could be enough to cause some to close, my own included.

“From their website the FCA appears to be primarily concerned with very large organisations such as banks, loan companies, etc, all with turnovers in the millions rather than mere tens of thousands. “How absurd that a scheme that makes finance available at no interest in support of the Government’s arts policy should be threatened by proposals designed to curb the activities of payday lenders.”