Former ICAEW chief Eric Anstee has called for the asset-based finance industry to be regulated in a bid to ensure businesses are treated fairly.

Now heading up the City of London Group investment firm, Anstee has called for a clampdown on the 'cosy' relationship between insolvency practitioners and asset-based lenders, which advance money against invoices and then take security of their order books in return.

His call was made following an investigation by The Daily Telegraph which highlighted allegations of lenders charging excessive and opaque fees as well as 'profiting' from administrations, with business owners claiming they have been forced into administration unnecessarily.

The paper said there had also been complaints of alleged 'collusion between administrators and invoice finance firms over insolvencies, with hefty contractual fees leaving unsecured creditors - chiefly the taxpayer - out of pocket'.

Anstee said there needed to be 'a thorough examination of insolvency practitioners' relationship with invoice finance firms. There are a lot of conflicts of interest'. He said that since the insolvency industry is already regulated it needs to examine the dynamics of its relationship with the asset-based lending industry.

Invoice finance lenders can - and do - put companies into administration and then appoint a 'friendly' insolvency firm. Some are even owned by insolvency practitioners.

But he stressed that any regulation would have to be carefully structured so it didn't stifle the industry.